Agency Agreement: An agent facilitates contracts between the principal and a third party (the customer) by introducing the third party, soliciting orders from the third party or by concluding contracts with the third party on behalf of the principal. An agent usually benefits from the relationship by receiving a commission from the supplier. An agent does not contract with customers in his own right and he therefore generally has no liability to them.

Allotment: Where a person acquires an unconditional right to be registered as the holder of a share. Allotment precedes the issue of the share. A share will be treated as allotted for cash with effect from the date on which the cheque for the share is received, provided that the directors have no reason for suspecting that the cheque will not be honoured.

Business Angels: Are high net worth private investors who invest directly (personally or through a syndicate) in private companies in return for a shareholding in the investee company and possibly a position on the board of directors.  Investments range from £10,000 to £2m.

Buy in management buy out: The combination of an existing management team with an external management team for the purposes of an acquisition of a business by the methods used in a management buy out or a management buy in.

Company Share Option Plans (CSOP):  Enable companies to grant share options to their employees. If certain strict conditions (in relation to the issuing company and the employee) are met a CSOP can be approved by HMRC and favourable tax treatment can result. A CSOP is risk-free for the employee in that there is no initial financial commitment or future obligation to exercise the option. The participant is given the right to purchase shares at a specified time in the future at a price set at the outset.

Confidentiality Agreement: An agreement binding the parties to keep certain information confidential.

Copyright: An intellectual property right which seeks to protect the form of expression of ideas, and not the ideas as such (which may be protected by confidentiality). It is intended to reward authors for the creation of original works, that is, works where the author has expended independent effort to create the work. Copyright law is intended to prevent copying but does not provide a monopoly; it does not matter if a similar work already exists provided it has not been copied. It lasts for a set period, most often the life of the author plus 70 years from the end of the calendar year of his death. No formalities need to be observed in the UK for a work to receive copyright protection. Protection in the UK automatically applies to all works recorded in any form provided that they conform to certain requirements.

Corporate venturing: The term covers a range of mutually beneficial relationships between companies. The relationships range from those between companies within the same group, through to those between unrelated companies and collective investment by companies in other companies through a fund. The companies involved may be of any size, but such relationships are commonly formed between a larger company and a smaller independent one, usually in a related line of business.

Corporate Ventures: Are larger trade companies looking to gain access to novel ideas and/or markets.

Are larger trade companies looking to gain access to novel ideas and/or markets.

Database rights: Arises when a set of data becomes a database i.e. a collection of independent works/ data, which is electronically accessible. It gives a protection right if there has been a substantial investment in obtaining, verifying or presenting the contents of the database.

Debenture/Legal Charge/Mortgage: A document executed by a company in favour of a creditor, providing the creditor with security over the whole or substantially the whole of a company's assets and undertaking, typically creating a fixed charge over the assets of the company which are not disposed of in the ordinary course of business and a floating charge over what remains.  In the event of your default, the deed will reserve to the creditor the power to appoint an administrator and manager with extensive authority to get in the assets, run the company's business and dispose of the assets either piecemeal or as part and parcel of a sale of the business as a going concern, to ensure that the lender is paid back what is owed.

Deed of Postponement of Loans: A document between creditors of a company which effectively restricts the repayment of a loan to one creditor before the repayment of a loan to another creditor.

De-merge: Means effecting a transfer of business and assets between companies within the same corporate group for the purpose of  re-organising the structure of a group.  It can also involve the segregation of business activities into one or more companies or groups of companies.

Design rights: Legal protection for the external appearance of a particular item, including its shape, configuration, pattern or ornament. A design right is distinct from a patent, which protects the internal workings of the item. The right entitles the owner to prevent others making items of the same design.

Direct means: A private sale between one seller and one buyer or a sale to a number of interested buyers.

Directors: As a company has no voice of its own, its directors make decisions on its behalf.  Directors therefore have day-to-day control of the company.  Directors also owe statutory duties to the company, its members and the general public under the new Companies Act 2006.

Distributorship Agreement: A person who buys goods on his own account from the supplier or exporter and resells them to customers in his own territory. He is essentially an independent contractor. He does not act as a channel of communication between the supplier and the customer and will usually have no authority to create a contract between the supplier and the customer.

Enterprise Management Incentive schemes (EMI): Enjoy very favourable tax treatment and are specifically targeted at small, higher-risk trading companies. The government's purpose is to enable these companies to attract high calibre individuals, with the aim of benefiting the overall economy.  There are strict conditions that must be satisfied in relation to the option, the company and the employee, but it is the easiest approved incentive scheme to set up in so far as the option does not require HMRC approval in advance.  This lack of red tape is often appealing to companies who qualify for the scheme.

Group: Means the family of companies where one company (parent company) owns a number of subsidiaries and/or where those subsidiaries themselves own shares in other companies.

Incorporated: Means a limited company having been formally established and registered at Companies House.

Inter Company Guarantees: A document entered into between the creditor, the borrower and the companies in the same group as the borrower, whereby the group companies guarantee the liabilities of the borrower to the creditor.

Inter Creditor Deeds: A document entered into between the company and two or more of its creditors.  The creditors agree with each other and the company to rank their security in order of priority and effectively restricts non priority creditors from exercising their debentures before the preferred creditor.

Invoice discounting (factoring): Invoice Factoring involves the cash purchase of a business’ sales invoices at a discount, after which, the factoring company collects the invoiced amounts from the business’ customers. Factoring is used where the business needs immediate cash and is a cost effective way for profitable businesses with a proven track record and a turnover of over £500,000 to improve their cash flow. The business retains control over the administration of its sales ledger and the facility is only available to businesses who sell goods or services on credit to other businesses. The discounter may advance a percentage of the total outstanding sales ledger for a monthly fee and interest on the amount advanced.

Issue: The actual issue of a share certificate to a shareholder.

The actual issue of a share certificate to a shareholder.

Joint Venture: Co-operation between two independent businesses under which both parties contribute towards the working and success of the proposal.

Know how: Technical information often exploited in conjunction with a patent. EU Regulation 240/96 governs the terms that may or may not be included in a knowhow licence agreement.

Limited company: A company limited by shares or by guarantee.  It is more common (unless incorporating a charity) to use a company limited by shares.  A company is a separate legal person.  In a company limited by shares, the shareholders’ liability is limited on liquidation to however much they owe to the company for their shares.  In a company limited by guarantee, its members’ liability is limited on liquidation to a sum set out in the Memorandum of Association (usually £1).

A company limited by shares or by guarantee.  It is more common (unless incorporating a charity) to use a company limited by shares.  A company is a separate legal person.  In a company limited by shares, the shareholders’ liability is limited on liquidation to however much they owe to the company for their shares.  In a company limited by guarantee, its members’ liability is limited on liquidation to a sum set out in the Memorandum of Association (usually £1).

Limited liability partnership: A hybrid form of business entity: it is neither a partnership nor a company. Like a company, an LLP is a body corporate and therefore a separate legal entity and an LLP member’s liability is limited. However, like a partnership the relationship between the LLP members is governed by private agreement. An LLP does not have shareholders or directors and is taxed like a partnership.

Management buy out: Where the existing management team buys out the business it manages by way of transfer of that business to a newly formed company and the purchase of the shares in that company.

Management buy in: Where an external management team is assembled to make an acquisition of a business by way of direct sale of the business (or shares) where applicable or by way of transfer of that business to a newly formed company and the subsequent purchase of that new company. 

Overdrafts: A tool to aid cashflow by a bank providing a reserve of easily accessible money to meet any shortfall in working capital. The facility is usually repayable "on demand" which means whenever the bank demands. Consequently, it is usually shown as a current liability on the balance sheet. It is a relatively expensive way of borrowing capital, interest being calculated on the amount outstanding each day.

Patents: An intellectual property right which permits the inventor to stop third parties from using the invention. Patent protection does not arise automatically and the filing of an application for a patent, followed by its grant, is necessary in order to obtain protection.

An intellectual property right which permits the inventor to stop third parties from using the invention. Patent protection does not arise automatically and the filing of an application for a patent, followed by its grant, is necessary in order to obtain protection.

Partnership: The relationship which subsists between two or more persons carrying on business in common with a view to profit. Partnerships are g