Category: upscale

What are the Duties of an Employer?

Posted on by admin in leadership, rule of law, Small Businesses, succession, transaction advisory, Uncategorized, upscale

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An employer is a person or other legal entity that controls and directs the actions of another person, called a worker or employee under an express or implied contract of employment and pays (or is obligated to pay) him or her salary or wages in compensation. The employer has duties specified by the law which he must be cognizant of at all times  as the breach of any of these duties may render the employer liable at law in the event of injury or loss to the employee and they include:

  • The duty to provide work for his employee.
  • The duty to provide a safe and healthy work environment. where it is not practicable to avoid the presence of hazards, providing adequate personal protective clothing and equipment without any cost to workers
  • The duty to provide competent co-workers so as to prevent or reduce the possibility of injury as a result of a co worker’s incompetence.
  • The duty to remunerate employees in accordance with the terms of the contract of employment if the employee arrives for work and can work..
  • The duty to indemnify employees against liabilities and losses resulting from following his employer’s instructions.
  • The duty to give employees reasonable opportunity to have their complaints resolved or mitigated.
  • Where a report is received from an employee about hazards or any injury or harm to health, he must within reasonable time after receiving the reportinvestigate the matter and determine the action, if any, to be taken; and notify the employee about what was decided.

If you are an employer and you feel you need advice on your rights and obligations, please feel free to contact us by email or give us a call at +2348036258312 or +2348188474167.

Investing in Renovating and Selling homes

Posted on by admin in Capital, corporate finance, Development, estate planning, International Investment, investment advisory, Personal Finance, real estate, Small Businesses, strategy, succession, transaction advisory, Uncategorized, upscale, wealth

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Balogun is  a banker approaching his 55th birthday. After a 30 year career as a banker, and seeing several people make their fortunes in real estate, he has decided to become a real estate investor.

His plan is to invest in underpriced property, with the objective of renovating the buildings and selling the individual units at a higher value than the amount at which he purchased the property.  Balogun is interested in understanding the risks and opportunities of this business and he comes to us for advice.

Some things to note:

  • Using this strategy, you purchase a building that needs fixing up for N2,750,000 and then you invest N500,000 in improvements (paint, landscaping, appliances, decorator items, and so on) and you also invest the amount of sweat equity that suits your skills and wallet. You now have one of the nicer homes in the neighborhood, and 2 years later you can sell this home for a net price of N4,000,000 after your transaction costs.

 

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  • Be sure to buy a home in need of that special TLC in a great neighborhood. With most properties, the long-term appreciation is what drives your returns. Consider keeping homes you buy and improve as long-term investment properties.
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  • This strategy is clearly not for everyone interested in making money from real estate investments. It is not advisable if you’re unwilling or reluctant to live through redecorating, minor remodeling, or major construction;
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  • You may not be experienced or comfortable enough with identifying undervalued property and improving it; so always make sure you get a professional opinion on each property .
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  • You should either have the budget to hire a professional contractor to do the work, or you should have the free time or the home improvement skills needed to enhance the value of a home.
  • You also need a financial cushion to withstand a significant downturn in your local real estate market, as this investment can be very cost intensive.
  • Mange your risks as much as possible!!! Make sure you do deep due diligence on the property in order to ensure that you have good title to transfer to a third party, especially since it may not make financial sense to perfect your title if you are not going to hold the property for a long period.

 

 

Why Lawyers Make Good Early-Stage Startup Hires

Posted on by admin in Compliance, Corporate Governance, entrepreneurship, International Investment, investment advisory, mergers and acquisitions, real estate, rule of law, Small Businesses, strategy, transaction advisory, Uncategorized, upscale, wealth

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By Daniel Doktori and Sarah Reed (culled From hbr.org)

It’s a startup shibboleth that entrepreneurship and formal education don’t mix. For icons such as Mark Zuckerberg and Bill Gates, so goes the lore, finishing a bachelor’s degree would have only stifled the creativity that fueled their companies to stratospheric success. PayPal founder Peter Thiel offers a $100,000 fellowship to “young people who want to build new things instead of sitting in a classroom.” Graduate degrees are thought to merely exacerbate the problem of too much thinking, too little doing. And while high-profile efforts by top business schools to teach and promote entrepreneurship have lessened the stigma around the MBA, the law degree continues to occupy a unique place of villainy among the startup set. After all, YouTube, Uber, and Airbnb, among many others, were founded on ideas that challenged, if not broke, laws and regulations. When it comes to a tech startup, lawyers are a bug, not a feature. Right?

Maybe not. Lawyers can add value in the obvious ways, helping to avoid early mistakes like issuing stock too late in the game, when the company has grown in value and the employees can no longer take advantage of favorable tax treatment. But more importantly, a lawyer on the early team can contribute to a thriving company culture by asking the right questions at the right times, providing perspective on crucial transactions, and getting smart fast on issues where the rest of the team lacks expertise.

Lawyers help startups deal with common transactions and avoid costly mistakes.

Issuing equity to the early team often triggers time-sensitive filings with the IRS. Successfully commercializing a product depends upon clean and clear lines of intellectual property ownership. Raising outside financing requires compliance with complex securities laws. A misstep on any of these items could mean an early exit for a startup company (and not the good kind). A corporate lawyer with a few years of relevant training can help navigate these and other common set-up requirements.

Moreover, lawyers, particularly corporate transactional lawyers, have repeated exposure to the types of deals — and the associated risks — that a startup will face. The dynamics between a CEO and the investors on her board are a function of the legal arrangements articulated in the financing agreements. The relationship between a company and its customers stems from a license agreement governing how users may interact with a product. Partnering with a larger company in a similar industry can, in the best case, open new markets or, in the worst, box a company into a corner, severely limiting options for growth and eventual acquisition. Lawyers understand these transactions and the perspectives of the negotiators involved.

And when the complexity of the particular deal exceeds the expertise of the lawyer on the team, she can play the savvy procurer of legal services, knowing how to target efforts and limit costs. Such experience comes in handy in managing other third-party service providers such as bankers, accountants, and consultants.

While these benefits are valuable, however, they don’t in and of themselves justify a startup hiring a full-time in-house lawyer. Early stage companies — at least those with founders sufficiently experienced or savvy to recognize that they walk a road pitted with legal potholes — tend to manage such standard risks by hiring outside counsel. And while the costs associated with that outside attorney often rank among the highest in a startup’s budget, they do not typically rise to the level of a full-time annual salary. To justify her presence among the first dozen employees, a lawyer must add something beyond legal knowledge to the equation.

Lawyers are trained to ask the right questions at the right times.

Counterintuitively, lawyers can add the strategic absence of knowledge. President Harry Truman famously longed for a “one-handed economist” when presented with the equivocating analysis of his advisers, but executives in politics and business need to understand opposing viewpoints in order to make informed decisions. Legal education and training includes a strong emphasis on questioning assumptions and probing for further information.

Rather than crippling the company through risk aversion and overanalysis, however, having a lawyer on the early team contributes to a data-driven, analytic culture of thoughtful decision making. Further, lawyers are trained as advisers and service providers. They can ask questions, explore options, and execute on answers, but they don’t expect to make the final call. This comfort with playing a supporting role helps avoid the egocentrism that can cripple any organization, particularly a nascent one.

The lawyer’s craft sometimes can be boiled down to a willingness to immerse herself within the “fine print,” offering to read what no one else will on account of complexity, length, or sheer dryness. Trained to ensure that even simple advice is backed by evidence, lawyers read closely to the point of comprehension as a matter of professional responsibility. Such a skill enables a lawyer to take responsibility for a wider variety of important matters. Fledgling startups inevitably have to rely on analysis over experience. Lawyers fit well in such situations.

Not every lawyer is well suited for the gig, however. A lawyer with the qualifications outlined above needs a tolerance for risk. For one thing, she must be willing to give up her plush office and lucrative salary for a computer station at a long table and compensation in the form of prayers, otherwise known as stock options. Her professional risk tolerance must follow suit. An essential attribute of a business attorney is providing “risk-adjusted” advice, and the level of tolerable risk for a startup generally far exceeds that for a Fortune 500 company. Lawyers at startups need to recognize that a workable answer today is often preferable to the perfect answer tomorrow; hand-wringers need not apply.

But risk tolerance must be accompanied by a stiff spine in situations where the company’s momentum (and the CEO’s vision) hurtles on a collision course with the law or the company’s outstanding commitments. In these cases, a willingness to speak up is one of the many things lawyers can bring to the table.

Daniel Doktori is the Chief of Staff and General Counsel at Credly, a digital credential service provider. He previously represented startup companies at WilmerHale, a law firm.

Sarah Reed is the Chief Operating Officer and General Counsel of MPM Capital, a venture capital firm that invests in early-stage life sciences companies. Previously, she was the general counsel of Charles River Ventures, an early-stage technology venture capital firm.

Managing Creditor Risk through Inter-Creditor Agreements

Posted on by admin in Capital, Development, entrepreneurship, International Investment, investment advisory, real estate, Small Businesses, strategy, transaction advisory, Uncategorized, upscale, wealth

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James is the CEO of  HOC Global Logistics, a company which provides shipping solutions to large organisations. Having become tired of leasing cargo ships from large vessel owners, the company desires to purchase its own ships which they can use and also lease to 3rd parties. James approaches Lakeside Bank for a Term Loan to finance the $50 million transaction.

The Bank after reviewing the loan proposal filed by HOC Logistics, informed James that the transaction was larger than Lakeside bank could comfortable handle. However they are able to loan him $20 million on the security of the purchased ship. James accepts the terms and applies for loans from Cityscape Capital Ltd , HSCB, Shanghai Bank  and Union Finance Ltd. The individual loans have different terms, interest rates and security interests. The complexity of the transaction is so mind boggling that James sets up an appointment with his Lawyers to advise him on how to manage the relationships between the multiple creditors in such a manner as to enable the company satisfy all its loan liabilities. He is advised to structure and negotiate an intercreditor agreement among the several creditors, thereby ensuring he has a more convenient financing process.

An intercreditor agreement seeks to govern the relationship between a range of creditors providing finance to the same borrower. An intercreditor agreement entered into by senior and junior creditors can be expected to rank the senior and junior security, subordinate the debt of the junior creditors to that of the senior creditors, restrict the junior creditors’ rights of enforcement for a specified standstill period and impose payment freezes on the junior debt in prescribed default situations.

In highly leveraged transactions such as leveraged buyouts and certain acquisition finance transactions, funding may be structured into a number of different tranches of lenders who stipulate slightly different lending terms and interest rates for the funds they advance. Senior lenders and mezzanine lenders usually take security over the assets of the borrower, over shares acquired and over the target group’s assets. In addition, guarantees will be given by the borrower and may also be given by the target group.

The senior creditors tend to have a stronger negotiating position than do the junior creditors, so it is usual practice for the senior bank lenders and mezzanine lenders to appoint a single security agent (or security trustee) to hold the security package on trust for the benefit of all the secured creditors. The intercreditor agreement contains provisions dealing with enforcement of the security, usually requiring the junior creditors (the mezzanine lenders) to desist from enforcement for the standstill period so as to leave the way clear for the senior creditors (the senior lenders and any hedge counterparties) to instruct the security agent as to when and how to enforce their right to the secured assets.

 

10 Reasons to Have an Employee Handbook

Posted on by admin in Capital, Corporate Governance, entrepreneurship, leadership, Small Businesses, strategy, transaction advisory, Uncategorized, upscale

Jacob runs a travel agency which caters primarily to individuals seeking overseas admission. After running the company  alone for a few months, Jacob hired Lucia to work in an administrative support role. A few months down the line, Jacob feels frustrated because Lucia has not been performing to his expectations. He periodically tries to tell her where she is going wrong, but she usually perceives his attempts as being overly critical and reacts defensively.

Jacob is confused. he is unwilling to fire Lucia, but he feels she is either incompetent or unable to understand his expectations of her. Lucia in turn feels stressed because Jacob has neither expressed his expectations of her, nor is there any handbook or documentation that could give her insight into his expectations. Jacob seeks legal advice on the way forward.

An Employee handbook provides the organisation with the following benefits.

Introduces employees to your culture, mission and values

Perhaps the most important aspect of your employee handbook is the introduction of new employees to your corporate culture. This helps to foster a sense of pride and belonging, which studies show will help employees become more productive in a shorter period of time.

Communicates to employees what is expected of them

A well-written handbook provides employees with a clear understanding of their responsibilities. The handbook also serves as a compass for the organization’s policies and procedures. For example, it advises employees what the procedures are for requesting time off or a vacation. It advises employees whom they should contact when they have an unscheduled absence (and what the timing should be). It tells employees whom to go to if they have questions about any of the specific policies in the handbook.

The handbook also communicates an employee’s general responsibilities regarding safety, timekeeping and reporting. By providing clear, accessible information, handbooks ensure companies continue moving in the right direction.

Educates employees about what they can expect from management and leadership

An employee handbook provides objectives and leadership styles, as well as management best practices, to foster healthy management-employee relationships. It also outlines logistics, such as timekeeping requirements, hours of work and pay periods.These clearly communicated policies help to eliminate confusion and inconsistencies that result when handbooks are silent on these topics.

Helps ensure key company policies are clearly and consistently communicated

No policy is effective if it is practiced inconsistently. A handbook will accurately communicate your organization’s policies regarding employment, conduct and behavior, compensation and other policies and procedures you follow. Most importantly, managers can refer to the handbook when answering questions or making decisions regarding your policies and ensure their answers and actions are consistent with your policies and best practices.

Showcases the benefits you offer

Does your organization offer vacations, investment plan, health insurance, paid parental leave or other benefits to employees? Make sure they know about these policies and the eligibility requirements by communicating them in the handbook. A robust benefits package can help you retain your best and brightest employees, so be sure they know about your full suite of offerings by communicating these in the handbook.

Ensures compliance with federal and state laws

No matter what state or country you do business in, or how many employees you have, you will be subject to state and federal employment laws. Your handbook not only communicates these various entitlements and obligations to employees, but is useful in demonstrating that your organization strives to be compliant with these regulations. you  will want to be sure they understand their rights and obligations .

Helps defend against employee claims

Employers should consider it a matter of when, and not if, they will face a lawsuit or similar challenge from a current or former employee. When this happens, one of the most useful documents you can provide your attorney will be a copy of your handbook.

A thorough and compliant employee handbook will help to show that the organization exercised “reasonable care” towards its employees. The employee’s signed acknowledgement page will show that the employee had an opportunity to familiarize themselves with the organization’s policies, a chance to ask related questions, knew whom they could turn to for help within the organization, and agreed to follow the terms and conditions of employment set forth by the organization.

Lets employees know where to turn for help

Ultimately, you want employees to feel comfortable turning to a trusted member of management for help when they want to report workplace violations, obtain workplace-related assistance and get answers to any other questions they may have.When a handbook not only outlines one or two management individuals for an employee to turn to in these situations, but also designates another individual to turn to in the event the employee disagrees with the first decision, they are more likely to keep their complaints in-house, and this is a good thing for employers.

 

 

 

 

ARE SALARY DEDUCTIONS LAWFUL?

Posted on by admin in Capital, Compliance, Corporate Governance, entrepreneurship, investment advisory, Personal Finance, rule of law, Uncategorized, upscale, wealth

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Donald owns a golf course business run through a company called Great Ltd. The business is performing poorly and there are significantly fewer customers than last year. Donald takes the view that this is the fault of his employees. He decides he will ‘make the business great again’ by firing staff or deducting their salaries.

Donald has never liked one particular employee called Bernard. As Bernard is doing his usual maintenance work on the golf course, Donald walks up and asks him aggressively why he is not working faster. Before he can answer, Donald states that he is going to deduct 20% of Bernard’s salary!!!

Fast forward to the end of the month, Bernard receives his pay check and notices that indeed 20% had been deducted from his salary, after taxes! he was so infuriated and reported the matter to this line manager, who after giving him the runaround, informed him that the order to deduct his salary came directly from Donald. Understanding that he can achieve no objective by working with the company hierarchy, Bernard seeks legal advice on his options.

As a general rule, Under the Labour Act LFN 2004,  all amounts payable to an employee in relation to the performance of work must be paid in legal tender and periodically. It should be noted that the Act does not not govern the amount or periodicity of wages, but merely stipulates that the terms should be reduced into writing by the employer.

There are very specific provisions in the Act regarding the circumstances when an employer can make deductions from an employee’s wage or salary and it is important for employers to understand their obligations.

S.5 (1) of the Labour Act provides that except where expressly permitted by law or where loss or injury has been caused to the employer by the wilful misconduct or neglect of the worker, no employer shall make any deduction or make any agreement or contract with a worker for any deduction from the wages or any other moneys to be paid by the employer to the worker, for or in respect of any fines. This suggests that the use of wage deductions as a punitive or disciplinary measure is to a large extent unlawful.

Allowable deductions include;

  • Pension
  • Personal Income Tax
  • Union contributions, where the worker has accepted in writing to make voluntary contributions to the trade Union
  • Over payment of wages, but only in respect of any such over payment made during the three months immediately preceding the month in which the over payment was discovered.
  • Deductions which have been expressly approved by the worker, e.g Cooperative contributions, judgment debts which have been duly garnished by the judgement creditor or loan payments due to a 3rd party. The written authorisation from the employee must specify the amount of the deduction and may be withdrawn or varied, in writing, by the employee at any time.
  • Deductions for goods or services provided by an employer, or a related party to the employer, to an employee in the ordinary course of the employer’s business, and which are provided on terms and conditions that are the same as, or not more favourable than, to the general public.
  • A deduction which is to recover costs directly incurred by the employer as a result of the employee’s voluntary private use of particular property of the employer, whether the use is authorised or not. e.g cost of items purchased on a corporate credit card for personal use by the employee, cost of personal calls on a company mobile phone

However, it is possible that a situation may arise where the salary of the worker is tied to their work product, in which case, the suspension of an employee’s employment may not be viewed as a salary deduction.

Employers need to be very cautious in effecting payroll deductions,understanding that there is a distinction between a “belief” that there is a right to recover money from an employee, a legal right to recover money from an employee, and the method that the employer can ultimately use to recover any money.

The Law does not simply permit an employer to take the easy option of making a deduction from the employee’s future wages or salary to recovery money which the employee owes the employer.

Further, employers should be cautious in simply seeking to rely on any general deduction wording in their employment contracts.  Despite such contractual wording, an employee’s express written authorisation of a specific amount will still be required, unless the deduction is properly authorised by an industrial instrument, legislation or court order.

In addition, employers are prohibited from requiring employees to spend any part of their payment in relation to the performance of work where the requirement is unreasonable.  Where employees are required to wear a particular brand or type of clothing and are required to purchase that clothing, then that requirement has to be reasonable to be enforceable and not be in breach of the Act.

Employers should seek professional advice if unsure about the lawfulness of a payroll deduction for the employer’s benefit, BEFORE proceeding, as an unlawful deduction may attract a civil penalty under the Act.

 

 

The Biggest Mistakes Entrepreneurs Make when Hiring Business Lawyers.

Posted on by admin in Capital, Compliance, Corporate Governance, Development, entertainment, entrepreneurship, International Investment, investment advisory, leadership, Personal Finance, real estate, rule of law, Small Businesses, strategy, Uncategorized, upscale, wealth

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I do not pay my lawyers to tell me what I cannot do, but to tell me how to do what I want to do.

J.P.Morgan

Ikenna is a brilliant programmer and all round tech whiz. in 2015, he designed a classified listings website called TRUGG, which drew public attention and commercial success due to its  user centered design  and simplicity of use, as well as its global reach.

However, As his company grew rapidly, so did the rate of lawsuits filed against the company. Aggrieved users, competitors and random individuals would file cases against the company, costing the company millions of Naira in time, legal costs and settlements. After a few years of fielding these cases, Ikenna decided to seek advice from Joe, a fellow successful tech entrepreneur,  on the desirability or otherwise of retaining a commercial lawyer for his business.

A good business attorney, when fully embraced  and informed, guides the company and its management on all touch points- products, services, communications, investor relations and customer service. Your lawyer will provide vital assistance in almost every aspect of your business, from formal business incorporation to basic compliance, copyright and trademark advice, and civil, contractual, or criminal liability arising from the activities of the company.

Most small businesses put off hiring a lawyer until the sheriff is standing at the door serving them with a summons. Bad mistake. The time to hook up with a good business lawyer is before you are sued. It’s easy to get into court, but very difficult and expensive to get out once you’ve been “trapped”. Once you have been served with a summons, it’s too late–the problem has already occurred, and it’s just a question of how much you will have to pay (in court costs, lawyers’ fees, settlements and other expenses) to get the problem resolved.

A good commercial law firm should be ideally able to handle your lawsuits, negotiate your lease of office or retail space, file a patent or trademark, draft a software license agreement, advise you on terminating a disruptive employee, and oversee your corporate annual meeting.

For many entrepreneurs, the idea of consulting a lawyer conjures up frightening visions of skyrocketing legal bills. The fee a lawyer will charge to keep you out of trouble is only a small fraction of the fee a lawyer will charge to get you out of trouble once it’s happened. When you hire an attorney, ensure you draw up an agreement (called an “engagement letter”) detailing the billing method to be applied and also specifying what expenses you’re expected to reimburse. This saves from conflicts arising from billings and requests for reimbursements.

Your lawyer should tell you what the law says and explain how it affects the way you do business so that you can spot problems well in advance. However, you should note that no lawyer can possibly know everything about every area of law. If your business has specialized legal needs (a graphic designer, for example, may need someone who is familiar with copyright laws), your attorney should either be familiar with that special area or have a working relationship with someone who is.

You should be able to communicate openly and freely with your attorney at all times. Good looks and a dynamic personality are not as important in a lawyer as accuracy, thoroughness, intelligence, the willingness to work hard for you and attention to detail. Look out for a lawyer who believes in your business and who is willing to go above and beyond the call of duty in managing the risks of your business and resolving any issues that may arise before they start.

Thoughts on Strategy

Posted on by admin in entrepreneurship, strategy, Uncategorized, upscale, wealth

Knowledge and information, technology, people and inspiration are the weapons that leaders of an organization should have before they step into a battle.

Kautilya

Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things”

Miyamoto Musashi,

Strategy without tactics is the slowest route to victory, tactics without strategy is the noise before defeat.”

Sun Tzu

Be vigilant about your competitors’ efforts and progress.

Kautilya

Startups also have a true north, a destination in mind: creating a thriving and world-changing business. I call that a startup’s vision. To achieve that vision, startups employ a strategy, which includes a business model, a product road map, a point of view about partners and competitors, and ideas about who the customer will be. The product is the end result of this strategy

Eric Ries

So how do you beat laziness? The answer is a little greed.  It’s that radio station WII-FM, which stands for “What’s In It-For Me?”

Robert Kiyosaki