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Business Law


  • Helena

  • Andrew

Business Acquisitions, Sales And Mergers

Whenever businesses, whether companies, partnerships or sole traders, merge or are sold, there is a wide range of matters which must be considered and attended to, and which are not always thought of by the owners and operators. Leases of business premises may need to be transferred, as well as the plant and equipment of the business. Employees’ contracts may need to be transferred to the new business, which means consideration needs to be given to continuity of employee entitlements, such as leave accruals. Other things which may need to be attended to include intellectual property transfers, goodwill, and the sale of debts and credits, which may even include tax credits. All of these matters should be included in the documentation dealing with the sale of the business.

Business Structures & Restructuring (Companies, Trusts, Partnerships)

Whenever commencing a business or investment, consideration must be given to the legal form that the business should take, keeping in mind the nature of the business activity, and the level of risk involved. Companies are an effective means of limiting the liability of the operator, but can be expensive to establish. Partnerships are more flexible and less regulated, but the operator, as with a sole trader, is more exposed to personal liability. Trading through a trust is an effective means of preserving the assets of a family business. However, the conditions at the time of commencement of the business may change over time. For example, expansion may result in a sole trader or partnership rolling into a company. Such changes require more than a mere formality. It can often require what is effectively the sale and transfer of the old business into the new structure.

Shareholders & Unitholders Agreements

Every legal entity, whether a trust, a company or a partnership should have a document akin to a constitution, which defines the rights, entitlements and duties of everyone involved. In some instances, such as superannuation funds and companies, they are required by law. In all cases, though, it is a very sensible and practical means of avoiding misunderstandings and disputes at a later time. If disputes occur, which can sometimes be unavoidable, the governance documents provide a useful mechanism for resolving those disputes in a cost effective and timely manner.

Start-up Advisory

Before commencing any business activity, it is essential to determine first the legal entity through which the business will be operated: a company, a partnership, sole trader, or trust. That decision will be made on the basis of the nature of the business, the risk involved, and the taxation implications of the particular business activity. All legal and practical requirements should be considered in advance, to avoid any later disruption to the business. For example, workers’ compensation insurance is required by law, but directors’ and officers’ insurance is not, yet may be required, depending on the activity involved.

Business Succession

Small businesses are particularly exposed to risk of damage to their operations and continuity, in the event that one or more of the operators dies or leaves the business. Plans should be put in place at the outset, to ensure that the business itself if protected if such an event occurs. This will include such things as making a decision about the particular legal vehicle for the operation of a business, or, in the case of partnerships, specific agreements about the ownership of assets on the death of a partner. Additionally, partners and directors should have in place powers of attorney, to ensure that the business is not interrupted if one of the parties is unable to continue in the business.

Commercial Agreements

Whenever commercial entities enter into contractual relations with one another, it is always a wise course to ensure that the agreement is fully documented. Commercial agreements, then, should clearly define what the parties are entitled to do, and what they are required to refrain from doing. Although commercial contracts can be verbal, or implied, it is always best to ensure that they are written, and set out in a formal manner. Commercial agreements can be necessary in respect to all aspects of a business’ operations, such as employment contracts, leases, loans and employee safety.

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