Part of Adam Ahmed & Co’ services is in acting as advisers generally to our business clients.
Business law covers a range of areas which arise when someone is starting a business, running a business or even interacting with a business, such as:
• What is the best structure to use when setting up a business?
• Are there any legal implications to consider when buying a business?
• Are there any legal implications to consider when selling a business?
• What needs to be covered in a sale or supply contract, intellectual property contract, loan contract or other business related contract?
• What to do if you are involved in a dispute or a relationship that has gone sour.
• How to best protect yourself from disputes, non-paying customers, or being sued?
It’s not enough to just know the law, or to help you when asked, once you’re a client of ours we will proactively tell you whenever we see an opportunity that your business could take advantage of to grow. Once you start working with us, we become invested in your success.
Frequently Asked Questions
Helping our clients identify opportunities and risks that arise in their business operations and ways to take advantage or deal with the circumstances using our experience and strategic thinking.
Business law covers laws and contracts between businesses and other businesses, businesses and their customers and businesses and Government. Examples of these are:
- The best structure to use to set up a business
- Negotiating and drafting contracts, ensuring the contracts are enforceable and reflect the commercial deal
- Business strategy
- Asset acquisitions and sales
- Business acquisitions and sales
It tends to come down to three things: tax, asset protection and exit strategy.
The tax strategy asks what the best structure is to allow you to not be paying more tax than your competitors – which would obviously put you at a competitive disadvantage. The more tax you pay, the less you have to re-invest in your business, which is particularly vital early on where cash flow is so important to business success.
The asset protection strategy asks what to do if something goes wrong. For example, if sued by a customer can you localise the effects so as not to take the whole business down? Or if you personally are affected by something (e.g. divorce) is there a way that your business won’t be affected? If the business needs finance, what is the best way to do this?
The exit strategy asks what you will do if you ever decide to leave the business – say if you sell it, or if you pass it on to your children, or others. Businesses that are structured correctly are more saleable, and also are often easier to lend to if need be.
If you use a company structure, the idea is that the company is a separate person under the law so it, rather than you, are affected by adverse actions against the company. In Australia, there are a lot of ways for directors to be made personally liable which reduces the benefit of using a company structure. It can still be better than trading in your own name, but you would not be able to assume that just because you are using a company you will be fine.
In a partnership all partners are jointly and severally liable. This means that if one partner makes a mistake, all the partners can be sued and required to pay – actually it really means you can pick on any one or more partners and make them pay all or part of the bill. Usually the partner with the deepest pockets is the one at greatest risk of being in the firing line. Some partnerships use indemnities between the partners so that the partner responsible has to pay, but the reality is if you’re in a situation where you are relying on such an indemnity, it is probably because the offending partner didn’t have enough money, so you’re not going to be better off. There are limited partnerships, where limited partners have limited liability but in such partnerships there needs to be a general partner who has unlimited liability.
A joint venture is where two or more people work together on a specific project and are each responsible for their own separate part. In return they collect a certain portion of the output. For example, in a mining project you might have someone who supplies the trucks and a different person who supplies the drilling equipment in a joint venture. The two parties are not jointly and severally liable like in a partnership, but are responsible for their own parts in a project. There are two types of joint ventures – incorporated and unincorporated. The incorporated one leaves little doubt that it is a joint venture and not a joint and several partnership.
At the very least when there is a major transaction, dividend or changes to the capital structure. It is often beneficial to have good records.
Yes. A shareholders’ agreement is a great way of making sure everyone participating in a business is on the same page. This is achieved by having full and frank discussions at the beginning covering key issues such as what the business will do (seems simple but a conflict of visions is common and also creates problems), when dividends will be paid, how much or if directors will be paid, whether a shareholder can be involved in other businesses, what happens if someone wants to sell their shares and when and how the company will spend money. This is not an exhaustive list, but the more detailed the better. We have had clients who, on negotiating a shareholder’s agreement, realized they weren’t on the same page so did not continue with the business.
Yes, and it is also best to have some form of security which is then recorded on the PPSR. This doesn’t mean you can’t enforce a verbal contract for lending money, it is just much harder to do because you need evidence of its terms and if you’re in a dispute, chances are the other person won’t be remembering things the same way as you. They might even remember the money being a gift.
Yes. For example, certain tax debts are payable by the director if not paid by the Company and on winding up a liquidator can recover money previously paid to a director, or for debts incurred while the Company was insolvent. We have written an article about some of the circumstances in which a director can be personally liable for Company debts.
If you have any other questions, please contact us
Business Law is a broad area. It requires not only sound legal knowledge but also experience and an understanding of commercial transactions and the manner in which businesses operate.
If you require any assistance with a commercial or business law matter, then please contact us
Adam Ahmed & Co is well equipped to assist in commercial and business transactions with our lawyers having worked on business transactions across numerous sectors and business sizes from small, medium and large multinationals.