Glossary

Click one of the letters below to advance the page to terms beginning with that letter.

a

Affiliate

In relation to a company, this includes any subsidiary or holding company of that company.

Ancilliaries

In relation to a company transaction, this refers to documents such as board minutes and share applications which have to be prepared in order to give effect to the main documents in a transaction.

Articles of Association

The core constitutional document of every company that sets out the purpose of the company as well as the duties and responsibilities of the company’s members.

Asset Sale

The sale of certain named assets of a company, partnership or sole traderas opposed to a share sale.

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b

Boilerplate

Standard clauses contained in commercial agreements.

B2B

Business to business

B2C

Business to consumer

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c

Companies House

Is the UK’s registrar of companies for all forms of companies as permitted by the Companies Act 2006.

Confidentiality agreement/non-disclosure agreement

Contract where one or more parties agree not to disclose confidential information that they have shared with each other or know, as a result of doing business together.


Copyright

An intellectual property right granted to the author, composer or publisher of a literary, musical, dramatic or artistic work.

Corporate Finance

The area that involves the financial aspects of a business or company, such as sources of funding, accounting and investment

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d

Due diligence

A comprehensive investigation of a business carried out by a prospective buyer.


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e

EMEA

“Europe, Middle East and Africa” - the region that an international company may operate. American corporations fondly think this is one geographical zone.

Employment contract

Contract of services between an employer and employee that sets out the employee’s terms and conditions of employment.

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f

Filing

The sending of certain documents to be issued or registered, usually at Companies House or at court.

Force Majeure

Unforeseeable circumstances that prevent someone from fulfilling a contract.

Franchising

Method for expanding a business and distributing goods and services through a licensing arrangement.

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g

Guarantee

Where a person or company which is not directly a party to a transaction nonetheless, on behalf of one party, promises to “stand in the shoes” of that party and make sure the contract is carried out – or be responsible for any losses suffered if it isn’t. This might be given by a director for a company or a “parent company”.

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i

Indemnity

Compensation for damages or loss, on a pound-for–pound basis.

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j

Joint venture

A business deal in which two or more parties combine their expertise and share the risk, profits and liabilities.

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l

Limitation

A mechanism where the liability or a person or company is capped – usually either to a sum, or to types of loss or liability.

Limited liability

The privilege companies and limited liability partnerships have of being legal entities separate from their shareholders or members, and protecting the members or shareholders from being sued. The price for this is public disclosure by accounts and other information being filed at Companies House.


Liquidation

The process by which a company is brought to an end and the assets and property of the company – if any are left - are redistributed.

LLP

Limited liability partnership

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m

MBO

Management buy out.

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p

Parent Company Guarantee

A guarantee by a parent company of a company’s performance or liability under a contract, where the company is a subsidiary of the parent company.

Partnership

Two or more persons in business with a view to making profits.

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q

Quorum

The minimum number of persons who must be present at a meeting in order for decisions to be made.

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r

Redeemable Preference Shares

A type of share in a limited company which is a way of securing debt – usually the shares have to be redeemed i.e the capital value paid back, by a particular time, with a rate of interest and before other payments are made. These count as the company’s debt, not as assets.

Registered office

Official address of an incorporated company registered with Companies House.


Restrictive covenant

Clause in a contract restricting the post-employment or post ownership activities of a worker, owner or shareholder for a limited time after the employment or ownership ends, in order to protect the employer’s the company’s or a new business owner’s legitimate business interests.


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s

Service contract

Contract between a service provider and customer to provide agreed services.


Shareholder’s agreement

Contract between the shareholders of a company in which they agree how the company will be run and what rights they are to have. Unlike the articles of the company, this is a private document and not publicly filed.

Share classes

Different classes of shares, for example “A” and “B” Shares which usually have different rights and dividends attached to each.

Shadow Director

Someone who is not a named director but who directs or controls the company .

Share Sale

Sale of shares and change of ownership within a company>

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t

Trademark

A symbol, word or sign which can distinguish your business’ goods and services from those of your competitors.

TUPE

Means the Transfer of Undertakings (Protection of Employment) Regulations 2006.

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w

Warranty

Usually promises or guarantees given by one party to a contract to another, which can be sued on if breached or found to be incorrect.

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