International - Written by on Wednesday, February 22, 2012 17:39 - 2 Comments

UK PLC, agents and a sensible approach overseas – SFO speaks again.

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Last week in our Ask Peter Lloyd of Mabey Group column a reader asked about the appointment of an agent in a territory.  Peter dealt with the question (and asked some more questions) here.

Speaking recently the Director of the SFO commented on the SFO position when it comes to the appointment of agents:

“Agents have caused difficulties for some corporations.  However, if you are trying to do business in a country that is not your own you need help.  You need to find people who can explain how business operates in that country and tell you about the cultural and legal issues.  What these individuals can also do is to introduce the foreign corporation to people with whom it is appropriate to do business or who can offer further advice.

All of this is very sensible.

What the SFO says to corporations is that they must work out whether the potential agent is somebody with whom it is appropriate to develop a business relationship.  No doubt the potential agent is asking the same question.  This means finding out more about them and seeing both on a personal and business level whether there is likely to be a very good and harmonious relationship.  Clearly, the corporation wants to be sure that the agent is going to act properly and in accordance with the cultural and legal requirements in the particular jurisdiction.  The agent no doubt will want to be sure that their own reputation and connections in the country will not suffer adversely through representing a corporation that perhaps is not sensitive to the business environment in the country.  All of this is a process of discussion and a process of getting to know and to trust the individuals and to be sure on both sides that there can be an appropriate relationship.”

In other words, the SFO understand that UK PLC will often need to engage agents to represent and assist it as it ventures into new markets and seeks to understand the cultural and legal requirements.

There is potential risk for both ethical agent and principal in such a relationship.  Due diligence and relationship building will need to be undertaken on both sides.  There are steps which can be undertaken to assist in this.

We are aware that when some western companies seek to enter a new market they adopt a heavy handed approach which risks damaging a relationship before it has even begun.

We are occasionally brought in to smooth such a process and explain to a prospective international partner the basis for the requests.  Often we we are also forced to suggest temperance to the UK corporate if they propose steps which are unnecessary.

 

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