The Nuances of Holding Legal Positions

What Does it Mean to Hold Legal

Holding legal is a term used in a wide range of legal contexts including both property and financial law. Holding legal is often used in the context of a land register. It is synonymous with the legal owner. In the case of land registers for example the person holding legal is the registered owner. The term is used in the context of companies under company law. The Companies Act 2006 defines holding legal. It states that: "A person holds shares in a company if his name is entered in the register of members" . Equally under company law the term is used in context of charge registrations under the Companies Act 2006. Section 413(3) in relation to charge registration states: "For the purposes of this Part, a person enters into a transaction or maybe a party to an arrangement if he becomes a party to the transaction or arrangement or a party to any transaction or arrangement which is a substitute for it". In Scotland the term holding legal is used in property law. Property law in Scotland states that in relation to securities the person which the creditor has the right to sue holds legal.

Legal Holding Requirements

The legal requirements for holding positions with corporations differ amongst entities, and certain qualifications must be met for appointment. For example, non-resident individuals and underage individuals can be deemed directors of the corporation if the corporation has obtained a permit, i.e. "dispensation" from the Registrar of Companies to appoint such individuals. Similarly, "dispensation" may be obtained where a company is incorporated to hold property in trust and the trustees are not all of the same family, which is prohibited by section 46(b) of the CA. Where a corporation is a subsidiary of a foreign company, one director of the corporation must be a resident of the Cayman Islands if such corporation does business in the Cayman Islands. For the purposes of applying the "business" test, the Permanent Secretary of Finance is authorized to make such determinations upon the advice of the Attorney General.
The proposed Companies Bill, 2010 ("Companies Bill") further proposes to impose new legal requirements and qualifications to be a director of an exempted limited liability company. This Bill is still awaiting the assent of the Governor. The bill proposes that at least one director of the company be of either Caymanian or Caymanian-owned status, or that the company satisfies its "economic substance" requirements. In terms of the latter option, the registrar of companies will define the economic substance requirements such as the notion that the company takes on significant business activities in the Cayman Islands in accordance with its core income-generating activities (CIGA) "having due regard to the relevant factors prescribed". The proposed Companies Bill further proposes additional requirements for the appointment of company secretary and officers of the company.
Section 19 of the CA provides that the registered office of a company must be kept in the Cayman Islands, during office hours and with reasonable notice, made available for inspection by any shareholder or officer of the company. However, under section 77(1) of the CA, a foreign company must have an established place of business in the Cayman Islands for the purpose of carrying on business in the Cayman Islands which may be used as its registered office.
A company must "subject to the provisions of any directions given by the Registrar of Companies", either have a natural person or a body corporate that is duly registered as a registered agent to act as its register agent. Registered agents are required to maintain such registers, records and other documents as required by the CA.

Benefits of Holding Legal

Advantages of Holding Legal Position – Rights, Obligations and Financial Benefits
Essentially, legal status or rights of ownership (also referred to as "holding legal position" and "holding title") is the concept that rights of ownership of a physical property extend similarly as rights to ownership of a business entity for legal and financial purposes.
The most common examples of rights of ownership in most business entities include:
When legal ownership applies to real property it typically translates to being on the deed, mortgage and/or deed of trust. Holding legal position, in terms of business entities, typically translates to having the stock center of record with the respective Secretary of State and/or Division of Corporations.
For the most part, the case law and case decisions that tends to weigh in favor of a party that is shown to be on the deed, mortgage and/or deed of trust. With respect to business entities, the person shown in the stock certificate book would have the ability to make decisions, along with other rights, within the subject business entity.
From a practical standpoint, the available remedies with respect to other assets can vary widely as a factor of facts and circumstances, legal principles and public policy considerations. With respect to business entities, the remedies are fairly straightforward in that the person who holds title can be awarded the right to receive distributions and/or operate the subject business entity.
Likewise, the same case law and decisions would also refer back to the concept of legal position or holding title. In other words, if the tax returns, credit applications, licenses etc., are not tied to the business entity as opposed to the individuals, then the individual obtaining credit is taking an undue risk that they would be solely liable without other resources available from the business entity itself.

Issues in Managing Legal Holds

Legal holds are, at their essence, notifications that tell employees and others not to delete responsive data, information, computers, mobile devices, or anything else that may be subject to litigation, an investigation, audit, or other legal matter. They are the most fundamental and important part of the preservation process. Most importantly, they are vital for protecting the integrity of the evidence in a legal matter, which includes any associated metadata. Conversely, fails to adequately manage legal holds can have disastrous consequences. Keeping in mind that these notifications are the starting point for all litigation, it is hard to understand why there is so often such carelessness in the management of legal holds.
The fact is, however, that many people have a hard time wrapping their head around a legal hold, as it is an abstract concept. There are also myriad common mistakes that are committed with legal holds, particularly when it comes to management of those legal holds. First, it is fairly common for custodians to misunderstand their actual obligations under a legal hold. In order to prevent deletion of potentially responsive data, custodians are typically instructed in legal holds not delete, destroy, or modify information until further notice. Yet, custodians commonly also mistakenly delete, destroy, or modify that information anyway because of misunderstanding .
A common example of this is deletions that occur when custodians innocently believe they can keep their systems (computers, mobile devices, file servers) and data as long as they do not delete, destroy, or modify the relevant files. Even if custodians mean well, the net effect of this is nearly the same as if the relevant data had been permissioned. As such, custodians who are subject to any legal hold need explicit instruction to keep their system and data, all of it, as is, in order to comply with the notice.
It is also critical to ensure that every custodian is aware of any changes to the overall scope of a legal hold. This includes new custodians or types of content added to the hold. This is no small order for larger organizations that may have numerous holds by many different parties, and can often require that enterprise legal hold management software be used.
One of the toughest parts of legal hold management can be managing compliance. Unfortunately, many organizations simply have no idea whether their custodians are compliant, and do not always take action even when they receive notice that they are non-compliant. This can lead to significantly increased costs and risk.
This can be fixed with regular check-ins with custodians to ensure that vendors and others are meeting their legal obligations. Properly managed legal hold notices set a solid foundation for effective Ediscovery responses. They also serve as a reminder that anything less than full compliance with Ediscovery can have implications that are very expensive.

Holding Legal in Corporate Governance

Holding legal rights has become a critical issue in modern corporate governance under Sarbanes-Oxley and other matters. Sarbanes-Oxley ("SOX") Sections 802 and 404 are concerned with maintaining the integrity of books and records, while FSGO Section 2635.704 requires all government employees that engage in procurement to maintain integrity of books and records, and the criminal and civil laws prohibit the destruction or failure to make required disclosures under many other laws, notably the SEC and ERISA. 93 sections of Sarbanes-Oxley deal with governance and books and records issues. 61 sections deal with penalizing individuals for data and record destruction and fraudulent record maintenance, including 2. Both SOX 802 and 404 have dealt with the question of retention of documents to avoid liability in bribery, fraud, and corruption cases and to assist in compliance with due diligence and good governance obligations. 802(a) makes it a crime for "whoever destroys, alters, mutilates, conceals, covers up, falsifies or makes a false entry in any record, document, or tangible object" with intent to impede, obstruct or influence, the proper administration of any matter within the jurisdiction of a state or federal department or agency, or in relation to or in contemplation of any such matter or trial or investigation thereof, to be guilty of a felony, often carrying a 20 year prison sentence. SOX 404 requires companies to establish, maintain, evaluate and test their internal control over financial reporting. 404 is a source of ever increasing controversy in the SEC and D&O Insurance communities because of its criminal implications, and the significant effort that will have to be made by higher management to personally certify, up to and including their CEOs. There are 6 different standards of legal review that a company will face in dealing with legal hold issues. Rigorous management of the legal hold process must be both information efficient and time sensitive , and subject to the aegis of lawyers. 1. Effective and Defensible Preservation Notices – current and adequate definition of deleted data and shut-down procedures. The preservation notice should be communicated to senior management, and should apply to prior employees. The HR function should routinely forward a hold notice to all employees that leave the firm, and the firm should periodically review key old files on a random basis to ensure continuing compliance with the retention notice. 2. Effective and Efficient Collection in Conformance with Standards. Workers must be given a reasonable amount of time in the context of their duties to respond, and normal follow up must be done to ensure no delay in the flow of data. The client must anticipate that the rate of information flow will increase at critical times until the ultimate litigation or regulatory date. 3. Automated processes must be created to provide an alert to management when "high risk" instances occur. 4. The Chambers 2001 Report on e-Discovery supports the use of iterative and continuous process models. The firm may close the data set, but needs to create and manage update processes. 5. Legal holds stay in place until litigation, litigation hold, or regulatory review is over and archived, destroyed or otherwise disposed of under the usual destruction methods of the firm. 6. Data collections must be time sensitive, limited in scope, and mindful of the need to potentially change the scope at times. Subject to such safeguards as co-counsel supervision and appropriate expense allocations between litigation budget and IT or administrative departments, the data collection may be done by any arms-length person or entity. Subject to the requirements of the law, this data collection may be delegated, and can include automated data collections and confirmation functions, such as the CyberEvidence-Certified Automated e-Discovery SolutionTM (www.CyberEvidence.com) or other CyberEvidence litigation support systems.