Ask the Expert: Overseas Business
Sharon Needle, managing partner of The Needle Partnership, helps companies understand the legal implications of international trade.
All questions are for general guidance only. Each case must be handled on the individual facts.
Q: What legal steps should British businesses take when looking at opportunities abroad?
A business opportunity abroad can be exciting for British businesses, especially as in the current challenging economic climate it is important to look at different ways of diversifying and growing and opportunities overseas can be a great way to open up the field of potential customers and to expand the variety of work carried out.
Once the expansion opportunity has been found, whether a joint-venture, acquisition or distribution arrangement, what is the next step?
Firstly it’s essential to ensure that the overseas business opportunity is properly researched and set up, to help avoid future disputes and misunderstandings.
This means undertaking comprehensive legal due diligence, which will need to cover the relevant industry in the target country, to gain an understanding of the framework in which the new venture would operate. Some industries are more regulated than others in different countries, and local laws may present unexpected challenges.
If entering into an arrangement of any kind with an overseas company it will be essential to first check its legal existence and capacity to enter into such arrangement as well as carrying out detailed research into its existing business.
Strong relationships with the business owners or employees in the overseas country will need to be forged, taking into account language and cultural barriers.
The type of agreements will need to be carefully considered from a legal perspective. For example, American franchise law is different from UK franchise law and centrally regulated, and under French employment law all employees are subject to a collective bargaining agreement - rendering the British business’s employment contract irrelevant. Fundamentally, what law shall govern the legal arrangements?
It is essential to have forward-thinking, sensible advice from a commercial law firm with experience of the potential issues involved in international expansion and with experience of working with overseas law firms. Getting advice at the beginning of an overseas venture can help to avoid some common pitfalls and let the business concentrate on growing seamlessly its international network using the best operational model.
Contact details
Sharon Needle
Managing partner
The Needle Partnership
0113 2374008
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