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Standard Terms of Business

(Last Revised 1 April 2009)
The following standard terms of business apply to all engagements accepted by Chapman Pugh. All work carried out is subject to these terms except where changes are expressly agreed in writing.

1 Professional obligations

1.1 We will observe the Bye-laws, regulations and ethical guidelines of Institute of Chartered Accountants in England and Wales and accept instructions to act for you on the basis that we will act in accordance with those guidelines. Copies of these requirements are available for inspection in our offices.

1.2 Where you give us confidential information we shall at all times keep it confidential, except as required by law or as provided for in regulatory, ethical or other professional pronouncements applicable to this engagement.

1.3 We reserve the right to act during this engagement for other clients whose interests may be adverse to yours. We will notify you immediately should we become aware of any conflict of interest to which we are subject in relation to you.

2 Investment services

2.1 Although we are not authorised by the Financial Services Authority (FSA) to conduct investment business, we are licensed by Institute of Chartered Accountants in England and Wales to provide certain limited investment services where these are complementary to, or arise out of, the professional services we are providing to you.

2.2 In particular, we may:

• advise you on investments generally, but not recommend a particular investment or type of investment;
• refer you to a Permitted Third Party (PTP) (an independent firm authorised by the FSA), assist you and the PTP during the course of any advice given by that party and comment on, or explain, the advice received (but not make alternative recommendations). The PTP will issue you with his own terms and conditions letter, will be remunerated separately for his services and will take full responsibility for compliance with the requirements of the Financial Services and Markets Act 2000;
• advise you in connection with the disposal of an investment, other than your rights in a pension policy or scheme;
• advise and assist you in transactions concerning shares or other securities not quoted on a recognised exchange;
• assist you in making arrangements for transactions in investments in certain circumstances; and
• manage investments or act as trustee (or donee of a power of attorney) where decisions to invest are taken on the advice of an authorised person.

2.3 We may also, on the understanding that the shares or other securities of the company are not publicly traded:

• advise the company, existing or prospective shareholders in relation to exercising rights, taking benefits or share options, valuations and methods of such valuations;
• arrange any agreements in connection with the issue, sale or transfer of the company’s shares or other securities;
• arrange for the issue of new shares; and
• act as the addressee to receive confirmation of acceptance of offer documents etc.

The paragraphs in italics above apply to corporate clients only and directors in certain instances.

2.4 The firm may receive commission from any introduction to a PTP in connection with the above, in which case you will be fully informed of the size and nature of such commission at the date of receipt. Such commission will be held in our clients’ account and will be rebated to you in full at the earliest practical opportunity unless we receive instructions to the contrary.

Financial Promotions

3 Client monies

3.1 We may, from time to time, hold money on your behalf. Such money will be held in trust in a client bank account, which is segregated from the firm’s funds. The account will be operated, and all funds dealt with, in accordance with the Clients’ Money Regulations of Institute of Chartered Accountants in England and Wales.

3.2 In order to avoid an excessive amount of administration, interest will only be paid to you where the amount of interest that would be earned on the balances held on your behalf in any calendar year exceeds £100. Any such interest would be calculated using the prevailing rate applied by Lloyds TSB Bank for small deposits subject to the minimum period of notice for withdrawals. Subject to any tax legislation, interest will be paid gross.

3.3 If the total sum of money held on your behalf exceeds £10,000 for a period of more than 30 days, or such sum is likely to be held for more than 30 days, then the money will be placed in a separate interest-bearing client bank account designated to you. All interest earned on such money will be paid to you. Subject to any tax legislation, interest will be paid gross.

4 Fees

4.1 Our fees are computed not only upon the basis of time spent on your affairs by the principals and our staff, but also on the level of skill, responsibility , importance and value of advice that we provide, as well as the level of risk.

4.2 If it is necessary to carry out work outside the responsibilities outlined in this letter it will involve additional fees. Accordingly we would like to point out that it is in your interests to ensure that your records etc. are completed to the agreed stage.

4.3 Feenotes are payable in full on presentation.

In some cases, however, at our discretion we may request that a fee is paid in advance or that a proportion of the fee is paid in advance by monthly standing order. Such advance fees will be regarded as “Client monies” – see 3 above.

5 Retention of and access to records

5.1 During the course of our work we will collect information from you and others acting on your behalf and will return any original documents to you following the preparation of your financial statements and returns. You should retain these records for at least seven years from the end of the accounting year to which they relate.

5.2 Whilst certain documents may legally belong to you, we intend to destroy correspondence and other papers that we store which are more than seven years old, other than documents which we consider to be of continuing significance. If you require retention of any document you must notify us of that fact in writing.

6 Quality control

7 Help us to give you the right service

7.1 If at any time you would like to discuss with us how our service to you could be improved, or if you are dissatisfied with the service you are receiving, please let us know, by telephoning Peter Pugh or David Chapman at this office.

7.2 We undertake to look into any complaint carefully and promptly and to do all we can to explain the position to you. If you feel that we have given you a less than satisfactory service, we undertake to do everything reasonable to address your concerns. If you are still not satisfied, you may of course take up matters with Institute of Chartered Accountants in England and Wales, Chartered Accountants Hall, Moorgate Place, PO Box 433, London EC2R 6EA. (www.icaew.com)

8 Applicable law

9 Internet communication

9.1 Internet communications are capable of data corruption and therefore we do not accept any responsibility for changes made to such communications after their despatch. It may therefore be inappropriate to rely on advice contained in an e-mail without obtaining written confirmation of it. We do not accept responsibility for any errors or problems that may arise through the use of internet communication and all risks connected with sending commercially sensitive information relating to your business are borne by you. If you do not agree to accept this risk, you should notify us in writing that e-mail is not an acceptable means of communication.

9.2 It is the responsibility of the recipient to carry out a virus check on any attachments received.

10 Data Protection Act 1998

11 Contracts (Rights of Third Parties) Act 1999

11.1 Persons who are not party to this agreement shall have no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement. This clause does not affect any right or remedy of any person which exists or is available otherwise than pursuant to that Act.

11.2 The advice that we give to you is for your sole use and does not constitute advice to any third party to whom you may communicate it. We accept no responsibility to third parties for any aspect of our professional services or work that is made available to them.

12 Money laundering

12.1 In common with all accountancy and legal practices the firm is required by the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2007 to:

• maintain identification procedures for all new clients;
• maintain records of identification evidence obtained; and
• report, in accordance with the relevant legislation and regulations.

12.2 We have a duty under section 330 of the Proceeds of Crime Act 2002 to report to the Serious Organised Crime Agency (SOCA) if we know, or have reasonable cause to suspect, that you, or anyone connected with your business, are or have been involved in money laundering. Failure on our part to make a report where we have knowledge or reasonable grounds for suspicion would constitute a criminal offence.

12.3 The offence of money laundering is defined by section 340(11) of the Proceeds of Crime Act and includes concealing, converting, using or possessing the benefits of any activity that constitutes a criminal offence in the UK. It also includes involvement in any arrangement that facilitates the acquisition, retention, use or control of such a benefit.

This definition is very wide and would include such crimes as:

• deliberate tax evasion;
• deliberate failure to inform the tax authorities of known underpayments or excessive repayments;
• fraudulent claiming of benefits or grants; or
• obtaining a contract through bribery.

This list is by no means exhaustive.

12.4 We are not required to undertake work for the sole purpose of identifying suspicions of money laundering. We shall fulfil our obligations under the Proceeds of Crime Act 2002 in accordance with the guidance published by Institute of Chartered Accountants in England and Wales.

13 Limitation of liability

13.1 We will provide our professional services with reasonable care and skill. However, we will not be held responsible for any losses arising from the supply by you or others of incorrect or incomplete information, or your or others’ failure to supply any appropriate information or your failure to act on our advice or respond promptly to communications from us or other relevant authorities.

13.2 You agree to hold harmless and indemnify us against any representation, whether intentional or unintentional, supplied to us orally or in writing in connection with this agreement. You have agreed that you will not bring any claim in connection with services provided to you by the firm against any of our employees on a personal basis.