Starting this week, ArtsProfessional is delighted to welcome Sean Egan, head of Bates Wells and Braithwaite?s Arts and Media department, to host an occasional legal column.
Send your legal questions to editors@artsprofessional.co.uk, and we will ask Sean to respond through this column.
Spot the difference!
Investing in theatre shows
As investors you may not have noticed, but as producers you should know, that regulation of ?angel? investments changed significantly on December 1 2001. Typically producers obtain the finance for a show by circulating their contacts with a prospectus setting out the proposal and inviting the investor to buy a number of ?units?. These offers usually agree to repay investors pro rata out of running profits and then when the show itself is in profit, overall profits are divided 60% to the investors and 40% to the producer. Under these arrangements the prospectus must be vetted by a person authorised to do so ? usually a lawyer, like me, or an accountant.
This model of investing works well for producers in that the investors do not interfere in the running of the production and the investors have the comfort of knowing that the document has been vetted. Investors can generally set off losses from such investments against profits made each year. Theatre companies which are charities can raise finance in this way but only through a trading company and should ensure they comply with charity law.
In December the ?bump in the night? was the coming into force of the Financial Services and Markets Act 2000 replacing the Financial Services Act 1986. The main changes are as follows:-
1. The underpinning law relating to investing is untouched but the law governing how such offers are promoted is overhauled so that it is clearer.
2. The regulator for those vetting prospectuses becomes the Financial Services Authority now the sole regulator of the financial services industry. Previously, professional bodies regulated their own professions e.g. the Law Society for solicitors. In practice this is likely to mean tougher and more consistent regulations and in particular producers who flout the law should watch out.
3. There are a number of useful exemptions allowing producers to dispense with the vetting procedure. In theory these are helpful but producers seem happy to stay with the vetting approach.
Producers now need to ensure their ways of raising finance are lawful under the new regime and must check that the person who used to vet prospectuses still can ? some will not have registered under the new regime. Investors need to check that prospectuses include the required notices specifying the firm who vetted the document and that it was authorised to do so by the Financial Services Authority.
It will probably take some time for the full effects of the change to be clear but in the meantime ensure you get up to date ? ignorance of the law is no excuse!
Is it legal.....?
Q: ?I was given permission to publish an article by the artistic director of a visiting company in our recent newsletter. Can I now put that article on our website without further permission from him??
A: ?You first need to look at whether the artistic director is an employee or not. If so, then the article is sure to fall within his job. You will be the owner of the copyright unless you have specifically agreed something different with the artistic director. As owner of the copyright you can freely use the article including putting it on your website.
The artistic director will be the owner of copyright in the article if he is freelance or if an employee where you have agreed that copyright is retained. In writing the article for the newsletter the artistic director clearly consents to that use and the question becomes whether that consent extends to the website. The answer comes down to the nature of the discussion, whether the website was ever referred to and whether, say, the newsletter is reprinted on the website as a matter of course. You have to interpret what both parties intended. You need also remember that there is a separate issue of payment for use. Assuming you have the right to reproduce you may have a standard practice as to payment that the artistic director knew about or some other means of determining what was intended. Failing that you will have to negotiate a payment.?
Coming soon.....
At times, the legal structure of arts companies who are also charities can seem completely at odds with what is happening in practice: trustees have the power to make decisions and, though unpaid, have the legal duties to ensure the company is run properly, but in practice, the artistic director will run the company together with an administrator or executive director. What are the implications of this?
Sean Egan is head of Bates Wells and Braithwaite?s Arts and Media department t: 020 7551 7796 e: s.egan@bateswells.co.uk