growing games - execution from a legal perspective

Overskrift maks 2 linjer

Underoverskrift maks 1 linje

UK dato >Indsæt >’Sidehoved og Sidefod

Vælg Sprog og vælg datoformat eller skriv datoen

direkte i datofeltet på siden

Brug evt. tilpasnings-værktøjerne i PowerPoint’s billedfunktion efter logoindsættelse

Execution - from a legal perspective LETT Law Firm P/S

Anders Erlandsen, Lawyer - LETT Law Firm

1

fredag den 30. september 16

September 29, 2016

Tekst går maksimalt til undermaginal 7,00


Tekst med punktliste

Punktopstilling For at skifte niveau, klik på ’Forøge listeniveau’

eller ’Mindske listeniveau’

Execution - from a legal perspective Agenda

•  Choosing the right company structure

•  Legal pitfalls when dealing with outside investors

•  Going international


2

Tekst og billede


Tekst og punktopstilling For at skifte mellem de

forskellige pre-designede tekst niveauer, klik på

’Forøge listeniveau’

For at komme tilbage til foregående tekstniveau klik ’Mindske listeniveau

Indsæt nyt billede 1. Klik på billedet

2. Åben ImageShopper og vælg billede

3. Klik ‘Insert image’knap 4. Højreklik på billede

og vælg ‘Placer bagerst’


Choosing the right company structure Start-up phase – why bother?


3

•  If no registration à courts and/or Danish authorities may consider your

company as being either

•  a sole proprietorship or

•  a general partnership

Tekst og billede













4

•  Downsides of not addressing the issue of company structure:

•  Joint, unlimited and primary liability

•  No internal allocation of responsibilities, profits/liabilities

or IPR

•  Challenges regarding tax and VAT

Tekst og billede













5

Upsides of having addressed the issue of company structure:

•  Expansion – ready for new investors / partners

•  Exits – who is in breach of contract (if any) à avoid dissolution of the company

•  Internal allocation of responsibilities, profits/liabilities and IPR in advance

Tekst og billede











Choosing the right company structure Company structures


6

•  Sole proprietorship (one man business)

•  Partnership (I/S)

•  Entrepreneurial company (‘iværksætterselskab’; IVS)

•  Private limited company (ApS)

•  Public limited company (A/S)

Tekst og billede











Choosing the right company structure Sole proprietorship


7

Only relevant for one man businesses

•  The enterprise is ‘identical to its owner’ from a creditors’ perspective

•  No statutory minimum for initial capital à DKK 0

•  No legal requirements regarding management structure

•  Compulsory registration for VAT no. à voluntary if yearly revenue below DKK 50,000

•  Taxed as personal income – up to 55.79% if above DKK 476,300 a year (2016)

•  Publication of annual report is voluntary

▪  Required to prepare both annual report and tax accounts

Tekst og billede











Choosing the right company structure Partnership (I/S)


8

•  Two partners (at least) à may be private individuals and/or legal entities

•  Joint, unlimited and primary liability •  No statutory minimum for initial capital à DKK 0

•  No legal requirements regarding management structure

•  Compulsory registration for VAT no. à voluntary if revenue below DKK 50,000

•  Required to prepare both annual report and tax accounts

•  Publication of annual report is voluntary – if one or more partners are private individuals

•  Taxed as personal income – up to 55.79% if above DKK 476,300 a year (2016)

Tekst og billede











Choosing the right company structure Entrepreneurial company (IVS)


9

•  A curious version of a private limited company (ApS) – introduced in 2014

•  One or more owners - limited liability

•  Statutory minimum of invested capital of DKK 1 – max DKK 49,999 à No non-cash contribution

•  Executive board compulsory à board of directors and/or supervisory board voluntary

•  Compulsory registration with Danish Business Authority

•  Ownership interest of 5% and more à Public Register of Shareholders

•  Bound to save up 25% of the profits – until reaching a company capital of DKK 50,000 •  Above DKK 50,000 à distributable reserves à dividend payment •  After reaching DKK 50,000 à possible (voluntary) to convert into an ApS

•  Public annual report and tax specifications required •  22% corporation tax on company’s net income + 42% tax on dividends distributed from the company

to personal shareholder à 54.76% (2016) •  If the shares are held by a holding company holding 10% or more à dividends are tax free until

distributed to personal shareholder.

Tekst og billede











Choosing the right company structure Entrepreneurial company (IVS), cont.


10

•  Differences from ApS and A/S:

•  Less strict requirements regarding invested capital

•  No non-cash contribution

•  Bound to save up 25% of the profits

•  Differences from sole proprietorship and partnership:

•  Limited liability

•  Public annual report

Tekst og billede











Choosing the right company structure Private limited company (ApS)


11

•  One or more owners – may be private individuals and/or legal entities

•  Limited liability •  Statutory minimum of invested capital of DKK 50,000– non-cash contribution allowed


•  Executive board compulsory à board of directors and/or supervisory board voluntary


•  Public annual report and tax specifications required

•  22% corporation tax on company’s net income + 42% tax on dividends distributed from the company to personal shareholder à 54.76% (2016) •  If the shares are held by a holding company holding 10% or more à dividends are

tax free until distributed to personal shareholder

Tekst og billede











Choosing the right company structure Public limited company (A/S)


12

•  One or more owners – may be private individuals and/or legal entities

•  Limited liability

•  Statutory minimum of invested capital of DKK 500,000 – non-cash contribution allowed


•  Executive board + board of directors and/or supervisory board compulsory •  Board of directors/supervisory board à minimum 3 persons


•  Public annual report and tax specifications required

•  22% corporation tax on company’s net income + 42% tax on dividends distributed from the company to personal shareholder à 54.76% (2016) •  If the shares are held by a holding company holding 10% or more à dividends are tax

free until distributed to personal shareholder

Tekst og billede











Choosing the right company structure Chart


13

Sole proprietorship Partnership Entreprenurial company

Private limited company Public limited company

Minimum initial capital

0 0 DKK 1-49,999 DKK 50,000 DKK 500,000

Owner(s)

1 1 or more 1 (at least) 1 (at least) 1 (at least)

Liability Unlimited, primary Joint, unlimited, primary

Limited Limited Limited

Management No legal requirements No legal requirements

Executive board (compulsory), board of

directors and/or supervisory board

(voluntary)

Executive board (compulsory), board of

directors and/or supervisory board

(voluntary)

Executive board (compulsory) +

board of directors and/or supervisory board of at

least 3 persons (compulsory)

Annual report

Required to prepare, publication voluntary

Required to prepare,

publication voluntary

Publication required Publication required

Publication required

Taxation Taxed as personal income – up to 55.79% if above DKK 476,300

a year (2016)

Taxed as personal income – up to

55.79% if above DKK 476,300 a

year (2016)

22% corporation tax on company’s net income +

42% tax on dividends distributed from the

company to personal shareholder à 54.76%

(2016) Tax-free dividend to holding

company holding 10% or more




(2016) Tax-free dividend to holding

company holding 10% or more




(2016) Tax-free dividend to

holding company holding 10% or more

Tekst og billede











Legal pitfalls when dealing with outside investors Maintaining controlling interest


14

•  How many (and which) shares are you left with? •  Dual share system/structures – voting rights left with A shares?

•  Who will get the majority of the seats on the board of directors?

•  Right of appointment?

•  Are any corporate decisions left for certain shareholders’ approval? •  Or changes of the articles of association?

Tekst og billede











Legal pitfalls when dealing with outside investors Use of shareholders’ agreement


15

•  Which matters should be dealt with in the articles of association or in a shareholders’ agreement? – from a legal and a commercial perspective

•  Provisions on the following issues are often incorporated in shareholders’ agreements:

•  Competition •  Shareholders’ rights to transfer shares •  Pre-emptive rights/right of first refusal •  Right to withhold purchase price in case of unsettled disputes

•  Right to pledge the owners’ shareholdings •  Shareholders’ trading with the company – terms/conditions •  Working shareholders’ work performance •  Definition of breach of the shareholders’ agreement

Tekst og billede











Legal pitfalls when dealing with outside investors Make sure you own “your” IP rights


16

•  A clear condition for investors à both the company and the owners declare full and unencumbered ownership of all relevant IP rights

•  Necessary to map out your IP rights à may be copyright, design right, trademark right, patent right etc.

•  If you declare such ownership, but you are not entitled thereto: à at best, the investment contract is invalid and you must indemnify investors

•  Or you must pay for the IP rights à very weak bargaining situation

•  In any case, you are likely to face legal action for commercial exploitation of IP rights which you do not hold

Tekst og billede











Legal pitfalls when dealing with outside investors Who is entitled to the IP rights?


17

An employee has developed a computer program following the instructions of his employer:

•  Danish Act on Copyright, section 59:  ‘Where a computer program is created by an employee in the execution of his duties or following the instructions given by his employer the copyright in such a computer program shall pass to the employer’

•  Very important: Section 59 is an implementation of an EU Directive – how is

‘computer programs’ interpreted in your jurisdiction?

•  Section 59 does not cover consulting agreements (work done by 3rd parties) à the holder of the IPR is determined by the agreement •  If no agreement à only right to the implied/intended use à not your IP

rights

Tekst og billede











Legal pitfalls when dealing with outside investors IP rights in APAs and SPAs


18

•  Asset Purchase Agreements:

•  Important to specify which IP rights are included in the purchase – especially unregistered IP rights

•  Stock Purchase Agreements: •  Which IP rights are to stay in the subsidiary/belong to the parent

company? •  Allocation of risk •  Opportunity for royalty payments to parent company – regardless of

dividend payment •  Can make restructuring of operations/activities in subsidiary easier

Tekst og billede











Going international Legal research before going international


19

•  Which of the available business forms are relevant for your enterprise?

•  Consider IP regulation separately in each market - How are computer programs protected?

•  Local corporation tax, income tax and VAT

•  Employment regulation

•  Advertising and marketing regulation varies widely in jurisdictions

•  Want to share customer information? à Data protection

Navn

Billede / Baggrund / Yderligere information

Titel: E-mail: Phone: Mobile:

Forretningsområder:


Anders Erlandsen

Advokat ( +45 33 33 03 18   +45 21 12 29 03 * [email protected]

20

Pause- eller kapitelside

København Aarhus - Rådhusgården Rådhuspladsen 4 Vester Allé 4 DK-1550 København V DK-8000 Aarhus C Tlf. +45 33 34 00 00 Tlf. +45 33 34 00 00 Fax +45 33 34 00 01 Fax +45 33 34 00 01

København Aarhus - Rådhusgården Rådhuspladsen 4 Vester Allé 4 DK-1550 København V DK-8000 Aarhus C Tlf. +45 33 34 00 00 Tlf. +45 33 34 00 00 Fax +45 33 34 00 01 Fax +45 33 34 00 01

growing games - execution from a legal perspective

Small Business & Entrepreneurship