Key issues for Brazilian start-ups & technology companies establishing business in the UK
Building the team
Attracting and hiring the right team will often be one of the most important priorities. It is important to understand local employment laws to ensure the company is properly protected. For example, technology companies are among those that will want to have strong provisions protecting their intellectual property.
UK employment law is thought by many to be the fairest in Europe from the employer’s perspective. It is now particularly flexible in the first two years of an employee’s contract, although companies would be well advised to familiarise themselves with their obligations and with employees’ rights.
Care should be taken if employees are to be given incentives such as shares or share options, as this can lead to substantial tax liabilities for the company, and it is also important to consider local securities laws.
Many growing companies entering the UK market from Brazil may wish to bring employees with them. However, this needs careful planning in advance – ideally at least six months prior to the date on which the employee needs to start working in the UK – so as to comply with immigration law and not disrupt the business plan.
There may be a few different visa options available, depending on the company, its plans and the individuals who will be coming to the UK. For example, the UK has a visa specifically targeted at talented people in the tech sector, which might be an option in some cases.
Companies looking to come to the UK should obtain some initial immigration advice before setting up an entity or hiring employees in the UK so as not to inadvertently reduce the visa options available.
If the Brazilian company’s plans include hiring staff within the UK, it will most likely need to register an entity in the UK. The two most common types of entity chosen are a private limited company or a UK establishment (often referred to as a branch).
A limited company can be formed very quickly and is the most popular option for overseas companies coming to the UK. Thought will also need to be given to how the business will trade in the UK. For example, will contracts be signed with the Brazilian company or the new UK entity?
A number of commercial activities in the UK and Europe are regulated. When entering the UK market, companies should consider whether their business falls within a sector that may have additional regulation.
For example,businesses in FinTech and other financial services may be subject to financial services regulations. In some cases regulatory compliance will be critical and may require detailed analysis of the business model.
Intellectual Property (IP) Protection
For many high-growth start-ups, as well as more established businesses, their IP is crucial and it will need to be protected. The type of protection will depend on the nature of the IP, the plans the business has for it, and to some extent on the company’s budget.
For many companies, some of their most valuable IP will be that in their name and logo, or in the name of a product or service. In the UK and indeed across Europe, registered trademarks should be considered, as should other forms of registered IP such as registered designs or patents, if appropriate and available for the company’s IP.
Unregistered IP can often be of significant value, such as copyright (for example in software code as well as website content). Businesses should look for appropriate ways to protect this, which could include contractual protections with employees, contractors, vendors and customers.
Before starting to do business in the UK, a company should consider how it trades and how it might need to adapt to the local market. The issues to consider will differ depending on the nature of the company’s business.
For business-to-consumer models it will be important to understand UK consumer law and to review standard terms of business. For business-tobusiness models it might be the case that fewer adaptions are needed, although to protect the business a local review should be undertaken.
With the growth of the technology sector and the corresponding dramatic increase in the amount of data being generated, collected and exploited, data privacy regulators around the world are looking at the ways personal data is processed and controlled.
The UK is no exception and has had specific legislation regarding the use of personal data for over 30 years. UK data-protection law stems from the European Union, although each European member state interprets the legislation differently and national regulators take different approaches.
Brazilian companies coming to the UK will need to consider the local data-protection law and what they need to do to comply. This will usually include notifying the UK’s data-protection regulator, the Information Commissioner’s Office, and depending on the business model and nature of the data flows, possibly other compliance steps.
With careful planning, most businesses should find it quite straightforward to set up in the UK from a legal perspective, leaving the management team to focus on the main task of growing the business.
By Philip Shepherd – Partner at Taylor Wessing LLP – Philip specialises in advising non-UK corporate clients entering the UK market by organic expansion and by acquisition. He is a member of Taylor Wessing’s inward investment team and co-editor of Check-In UK, the firm’s legal guide for overseas companies setting up and doing business in the UK.
This article was originally published by the Brazilian Chamber of Commerce in Great Britain in it’s January 2016 edition of the Brazil Business Brief and at the Brazilian Chamber’s website. Both the Brazilian Chamber and Philip Shepherd were kind enough to allow us to replicate the article on our website.