Glossary

Agreement to an offer (whether spoken, written in an email or more formal correspondence) with no provisos or suggested alternative terms (see counter-offer)

A contract setting out the terms where an investor pays in advance for shares that will be allocated at a later date.

Where an investor transfers funds to a company in return for the right to acquire shares at a future date (usually at the next funding round).

Where a business unfairly pressures a customer into paying money or entering a contract

Capital given to an early stage business by an individual (in return for a stake in the business)

A comprehensive report of a company's financial activity over the last financial year.

A document submitted by a business to Companies House on a yearly basis to confirm their business information is accurate and up to date.

A yearly gathering of shareholders and directors of a company (it is mandatory for listed companies but optional for private companies, unless their articles of association say otherwise)

A consitutional document that sets the internal rules that a company must follow (the Companies Act has a suggested template, but the company is free to set its own rules subject to mandatory Companies Act requirements)

Recognises the author (someone who has created a work, usually capable of being copyrighted) - it is distinct from ownership, as an author may not have any proprietary rights over the work

Business-To-Business. Where a business markets to or provides goods or services to other businesses, rather than individuals.

Business-to-Consumer. Where a business markets to or provides goods or services to individuals directly.

Investigating a person's past (e.g. criminal record, creditworthiness or being on prohibited lists), usually to ensure that they are permitted to do (or not prohibited from doing) an activity.

Where the parties each have a template contract or T&Cs which they want to govern their relationship and they need to agree whose document should be used (or if a new one should be drafted)

A right to economic benefit (e.g. a right to income or to sales proceeds) which is held by someone who is not necessarily the legal owner.

A meeting of a company's board of directors, to discuss business matters and decide how to proceed (or circulate a resolution to shareholders if their decision is required)

A group that supervises, manages and makes decisions about the business affairs of a company. Usually formed of the most senior employees, investor directors and non-exeutives or even other legal entities

A system of reward to recognise or incentivise the person who is eligible to receive the reward. Usually a cash incentive, but may include vouchers or goods. May be discretionary or guaranteed by contract

The rule book for non-broadcast advertisements, sales promotions and direct marketing communications, which is produced by the Advertising Standards Agency.

Company Share Options Plan. Where a company offers its employers and directors the ability to buy Options. It is usually discretionary and has perceived tax-benefits, as tax is not due until the Option is exercised.

Capitalisation table. A summary document setting out the ownership structure of a company (e.g. who the shareholders or optionholders are, how much of the company they own and what type of share they have)

Usually means money but can include other types of assets (for example equipment, property or shares)

A virtual system that can be accessed remotely (via the internet) and on demand by the user.

A sum or an asset that a borrower promises as security for a loan, which they must give to the lender if they default on their loan repayment.

Legislation containing majority of rules relating to companies. From setting out how a company can be created, what information must be reported, the obligations of directors, penalties a company and directors can face, as well as many more!

The UK Government agency responsible for formally creating and ending companies. They keep a record of key information about companies, some of which they make available to the public

A business which is formally registered with Companies House and has its own legal identity.

An advertisement which names a competitor to demonstrate that their product or service is inferior to the product or service being advertised.

The point at which the legal formalities for a sale and purchase are finalised and the transaction is concluded.

Recognises that the information is sensitive or commercially valuable and therefore there should be restrictions on how it is shared with others (if it should be shared at all).

Where the aim or benefit of the parties are incompatible. It usually arises where an individual has a duty to another person or organisation which means they cannot act for a new party without the risk of disadvantaging that person or organisation.

Where a data subject freely and actively indicates that they are happy for their personal data to be processed on the basis that they have been told how their information is used, what it is being used for and that they are able to change their mind in the future.

Something (usually money, but can be anything with economic value) given in exchange for goods, services or an act.

The shares remaining when a company reduces the amount of shares it previously had available. The effect is that the remaining shares have increased value, whilst the percentage of the company the shareholder owns is unchanged.

A contract between a client (needing specialist services or assistance for a set period or a specific project) and a consultant (that has the sought expertise or knowledge)

An individual or organisation with specialist expertise that offers their knowledge or insight in return for a fee. They tend to act in an advisory capacity.

A legally binding agreement (whether in a formal document, casual correspondence or conversation) for one party to fulfil an obligation to the other party in return for something (usually money but can be anything with economic value, for example goods or a stake in a company - referred to as consideration)

An individual or organisation engaged by a client to do work on a specific project or task. They may also provide specialist advice (like a consultant) but the key point is that they carry out the work themselves.

The document setting out the terms on which an individual or organisation will provide a company a convertible loan

Where an individual or an organisation provides a company capital in return for the company issuing them future shares (equal in value to the amount of the loan).

A type of intellectual property that gives its owner the exclusive right to make copies of a creative work, usually for a limited time.

Responding to an initial offer with amended or new terms (which has the consequence of rejecting the initial offer)

A legally binding promise for one party to do (or not do) something

The organisation that makes decisions about what and why information is being collected about individuals. The party that bears most responsibility to the Data Subject.

A mandatory contract between a Data Controller and a Data Processor which establishes the status of the parties and obligations of the Data Processor to the Data Controller. It is a statutory obligation have DPA provisions in place where there is processing of personal data

An organisation that carries out a task for the Data Controller which requires them to process personal data

A discipline concerned with keeping information (about people) safe, by making sure it is treated with care and only used by organisations when they have a valid reason. Discover more about data protection here.

A mandatory compliance process which helps a Data Controller identify the data protection risks of a project or new way of using personal data.

The named individual responsible for ensuring that an organisatoin is properly complying with data protection laws.

7 fundamental concepts which must be adhered to when processing personal data (e.g. transparency)

An organisation processing personal data has appropriate technical (e.g. anti-virus, passwords, admin controls) and organisational (e.g. staff training, published procedures on how to report a suspected personal data breach) integrated into their working practices.

The person who is (or could be) identified by information

A contact clause which sets out how disagreements about key issues will be resolved (to help avoid any potential impasse in the future)

One of the ways that companies can raise capital. The company borrows money from a lender in exchange for a certificate (which is registered at Companies House) as evidence that the company will pay the money back with interest.

When a business receives funding from investors without those lending investors receiving a stake in the business (in contrast to equity finance). The business will eventually need to repay the investor the borrowed sum with interest.

The template articles of association set out in the Companies Act. The template is the default position where a company has not created its own version.

A type of share which means that the shareholder has no right to dividends until a set of criteria have been met (for example, the company has achieved a specified minimum level of profitability)

A type of intellectual property that can be legally protected. It is the shape or configuration (external or internal) of an object.

Where a company makes more shares available with the consequence of decreasing an existing shareholder's percentage of ownership (e.g. where a company originally had 10 shares and a shareholder had 5 shares representing 50% ownership, the company issuing a further 10 shares will mean that shareholder's 5 shares now represent 25% ownership)

Direct marketing is where you send promotional material about your company, product or service directly to individual consumers, rather than through a third party (e.g. by posting an advert on social media)

Money taken from a company's accounts and paid to a director (which is not their salary, dividends or expenses) which the director will repay in the future. A company cannot make a directors' loan without the permission of the shareholders (a shareholders' resolution).

A document similar to an employment contract but which has additional clauses setting out specific rights and obligations of a director, including any formalities or procedures which might be different to other employees (for example, disciplinary sanctions or bonus entitlements)

A type of insurance to cover the cost of any compensation claims made against the directors or officers of a company.

A document provided ahead of a purchase (of shares or assets) from a company which gives additional information about the seller's warranties and allows the buyer to carry out proper due diligence before continuing with the purchase.

Treating a person unfairly because they have (or appear to have) a protected characteristic or not taking an action which means they are disadvantaged because they have a protected characteristic

Where a company distributes its profits to its shareholders. A company is only allowed to pay out dividends from profit (so if the company is not in profit, the shareholders will not receive any money)

Making enquiries and checking additional information (about a company, person, thing or situation) so a party can make an informed decision about whether they wish to enter an agreement or proceed with a transaction.

Enterprise Investment Scheme (a type of venture capital scheme). It offers tax benefits to investors to encourage them to invest in a company. There are restrictions on which companies can use the scheme, how invested capital is spent and sanctions if a company does not comply with the scheme rules.

Enterprise Management Incentive scheme. A reward scheme offered by companies to its employees which gives its employees a share option. It has tax-benefits for the company and can be a way to incentivise employees.

A person who carries out work in exchange for wages. This category of worker benefits from statutory employment rights (such as sick pay). They usually have an employment contract, but if they don't and the working relationship has the hallmarks of an employee-employer relationship (e.g. the person cannot arrange for a subsitute to carry out the work on their behalf) the worker will still be considered an employee.

Where an unlisted company seeks investment from a wide range of people (not just experienced venture capitalists) in exchange for a share in the company.

Where a company receives capital from an investor in exchange for the investor receiving shares in the company.

Where a lender provides a loan with a lower interest rate to a company in exchange for the lender receiving shares in the company.

A person who on the board of directors for a company who is also an employee of that company.

Where the way in which an employee carries out their role is adapted to meet the requirements of the individual employee (e.g. an earlier start and finish time). All employees have the right to request flexible working and their request should be granted unless their employee has a good business reason for refusing it.

Where a business seeks investment from external sources to grow its operations. A business will often have several different funding rounds for different stages of its growth (to reflect the different level of maturity of the business, e.g. from operating out of a garage to being registered at Companies House and having an office space)

Where an employee is prohibited by their employer from working or returning to their work place during their notice period.

A ban (set out in section 19 Financial Services and Markets Act 2000) which forbids a financial services professional or firm from carrying out financial services work in the UK

A type of share which only pays out once the company reaches a minimum value (e.g. once the company worth £250,000 becomes worth £1 million).

Also known as a term sheet. A document which acts as a precursor to a main agreement which has not yet been drafted but is likely to involve a series of negotiation before it is finalised. It creates a common starting point and can be used to set out a timeline to conclude the agreement as well as outline obligations of the parties during the negotiation process.

A worker's right to paid leave. The statutory minimum in the UK is 28 days.

Where a business is formally registered with Companies House to become a company and separate legal entity.

A contractual promise to reimburse the other party if they incur a loss (e.g. ABC Ltd uses XYZ Ltd vans to deliver its products. If XYZ Ltd has indemnified ABC Ltd against parking fines, it means that any parking charges that ABC Ltd receive and settle must be repaid by XYZ Ltd). Find out more about indemnity clauses.

Breaking a set rule (e.g. a term in a contract, law of a country) or doing something without permission (e.g. using a copyrighted image)

A type of intangible (non-physical) item or concept which has required creative input by the person who made, designed or thought of the concept. Examples include music, inventions, symbols and software.

Where a business or person owes a debt to more than one creditor and those creditors enter a contract with each other to determine how the debts are repaid (e.g. who should be repaid first, which assets are security for which debts)

The document between an investor and company which sets out the terms of their transaction (e.g. how many shares and what types of shares the investor will receive in exchange for a sum of money)

The earliest stage of forming a contractual relationship. Where one party indicates that they are open to starting negotiations about a transaction (e.g. marking an item 'for sale' without a stated price would encourage a potential buyer to offer a suggested price).

A finance tool that lenders offer to businesses which struggle with cashflow. Most invoices allow 30 days for a customer to pay them, which means the business is out-of-pocket until the invoice is settled. Here, a lender will immediately transfer some cash (representing a percentage of the invoice amount) to the business every time an invoice is submitted. For example, ABC Ltd submits an invoice for £1,000 and immediately receives 25% (£250) cash from the lender.

Creating shares in a company and transferring them to a shareholder

A justification that allows an organisation to process personal data. An organisation will be breaking the law if it is not meeting one of the six permitted justifications.

Where legislation requires the Data Controller or Data Processor to process the personal data in a specific way and there is a sanction if they do not fulfil that statutory obligation (eg. verifying that an employee has the right to work).

Where an enterprise is treated in law as if it were a person - with the ability to enter contracts, sue and be sued and own property. It is a useful mechanism for business owners who want to protect themselves from claims.

Where a party has the right to use, possess or own property (and they can enforce that right in court).

A justified aim for processing personal data. These can range from commercial to broader societal aims, but they must be defined in a clear way to assess whether using personal data to achieve the stated aim is necessary and / or proportionate. A legitimate interest assessment should be conducted to make sure that this lawful basis is used appropriately.

A compliance document that helps and evidences that a Data Controller has properly considered whether they are justified in using personal data to pursue their aim. It has 3 parts (purpose test - identify the aim, necessity test - must personal data be processed to achieve the aim and balancing test - do the benefits of pursuing the aim outweigh the risk to the individuals)

To have legal responsibility for something (e.g. tax liability means a party is responsible for settling the tax bill with HMRC, criminal liability is where an individual is found responsible by the court and has to pay a fine or go to prison)

A term in a legal agreement where one or both parties seek to reduce their legal responsibility to set a sum or specific scenarios. It is illegal for parties to limit their legal responsiblity for certain things, e.g. death or personal injury resulting from negligence

Where a lender provides something (usually money, but could be equipment etc) with the understanding that it will be repaid or returned by the borrower, usually with interest added.

This is the monetary value given to an asset once all factors have been considered (e.g. inflatation, supply and demand). It is a fluctuating figure due to changing external factors.