Etheringtons Solicitors

Business structures

When commencing a new venture or buying a business, it is important to operate through the most effective structure. Determining the most appropriate business structure requires consideration of the parties’ personal and financial circumstances, the size and nature of the business, the regulatory environment within which the business operates, and the owners’ desire and strategies for future growth.

Common business structures include sole proprietorships, partnerships, trusts and incorporated companies. Each have their own pros and cons and vary in their complexity, reporting requirements, treatment of income tax and level of asset and personal protection for the owners.

Companies and directors’ liability

A company is an incorporated legal entity with the capacity to enter legally binding transactions in its own right. Companies are a popular choice for operating small to medium-sized businesses, apart from some exceptions, officers and directors are not personally liable for the company’s debts.

When formed, one or more directors are appointed as authorised officers to conduct the company’s affairs. Directors hold a position of power and trust imposing on them several duties to act in the company’s best interests. Essentially, directors must:

• act honestly and use their powers to make decisions based on what is right for the company as a whole;
• avoid conflicts of interest and not use their position for personal profit to the detriment of the company;
• not use their position or information acquired in their role to gain an unfair advantage or benefit themselves or others;
• exercise care, skill and diligence in performing their duties;
• prevent insolvent trading.

Company directors face many situations and challenges that may place them in danger of breaching their fiduciary and statutory duties. In the case of uncertainty, directors should seek timely advice to clarify their position.

Certain defences may be available to a director who has breached a duty to avoid insolvent trading and it is critical that directors of companies facing financial difficulties seek professional assistance early.

Commercial contracts

Businesses enter into numerous commercial transactions during their lifetime. These arrangements should be governed by a written contract which captures the parties’ negotiations, sets out their rights and responsibilities and includes essential terms such as the scope of services or products to be provided, warranties and indemnities, and dispute resolution processes.

The subject matter of a contract varies considerably, from a single transaction for the sale of a product, to the ongoing provision of services over many months. The breadth of a contract will depend on the subject matter, its duration and the complexity of the transaction.

Intellectual Property

As technology continues to evolve it has become increasingly important to protect a business’s intellectual property.

Intellectual property comprises a range of valuable business assets based on the property of the mind or proprietary knowledge. It includes copyright, trade marks, designs, patents, plant breeders’ rights, trade secrets and confidential information.

Intellectual property such as trade marks, designs and patents can be protected by registration. This protection can be enhanced by using systems and protective agreements when dealing a business’ or individual’s intellectual property.

Copyright encompasses a collection of rights exclusive to the creator of certain original artistic works and materials. The creator has exclusive rights to reproduce the work in material form, to publish or perform the work, to make an adaptation of the work and to communicate it to the public. The creator may also enter into licensing arrangements for the commercial exploitation of the work.

Copyright subsists from the time of creating the work which need not be registered to invoke protection through the Copyright Act 1968 (Cth). Copyright laws form an important part of business or commercial law by protecting against the exploitation of original work and providing remedies to those who suffer loss through infringement.

If you need any assistance contact one of our lawyers at [email protected] or call 02 9963 9800 for a no-obligation discussion and for expert legal advice.

Planning your Estate – Wills, Attorneys and Guardians

Estate planning requires several steps. Even those with ‘simple’ family structures and modest assets should consider a range of matters to determine how their assets are distributed after death and how their legal, financial and medical affairs are managed if they are incapacitated.

Good estate planning requires:

• Preparing for the inevitable – having a valid Will to appoint an executor / trustee and to determine who receives your assets when you die.
• Planning for the unforeseen – ensuring powers of attorney and appointments of enduring guardian are in place so your legal, financial and medical affairs can be dealt with appropriately if you become ill, disabled or incapacitated.
• Ensuring your estate maintains value – distributing your assets in the most tax-effective manner, using a tailored approach specific to your circumstances.
• Protecting vulnerable beneficiaries – creating testamentary trusts to safeguard at-risk beneficiaries from third party creditors, estranged partners, or depletion of their inheritance due to incapacity, disability or dependency.
• Succession planning – ensuring appropriate arrangements are in place for business and company interests, whether those interests are to be wound up or handed down through generations.
• Minimising the potential for family provision claims – understanding family provision and implementing strategies to limit such claims.

Executors and administrators are the legal personal representatives of a deceased person and have significant legal responsibilities. They must ensure they are protected from potential liability in the event of a claim against the estate.