How commercial lawyers can contribute to a business
Owners and managers that have operated in the corporate industry for a number of years are no doubt aware the value that a commercial lawyer can bring to a growing company. All too often, lawyers are considered to be a last resort in cases where some kind of legal matter or problem has presented itself; the business may have been sued or be going through restructure for example.
However, it is a well known and pro-active business strategy to establish a relationship with a good quality commercial lawyer who will be a real asset to a company and add value to your business transactions and planning, particularly in the initial stages of the business or when those complex transactions or disputes arise. When companies are starting out, there are often a myriad of things that need to be dealt with in order for the business to find its feet; from staffing to marketing. Legal matters may not always be at the top of the list of priorities for those running the business,however, taking preventative measures with a commercial lawyer can go a long way in assisting in the business being protected and processes running smoother into the future. We have set out a number of the ways that a commercial lawyer would contribute to providing your business with solid foundations for business growth and a legally healthy wellbeing.
For many businesses the owners and managers view organising employee contracts as a fairly standard process that doesn’t necessarily require any special knowledge. However, in some industries, complex agreements and stipulations can be applicable and very important – the construction industry is a common example. Contracts will often be required that protect the companies’ interests and resourcing requirements in the case that the employee decide to leave. Technology companies may need to protect their interests as far as trade secrets and knowledge about developments and products. In these kinds of cases, the assistance of a commercial lawyer is imperative, to ensure the contract deals with the various legal and commercial issues including the provision for any restrictive covenants or confidentiality agreements, for example.
Commercial lawyers can organise the paperwork to ensure that a business’s intangible assets are protected via trademarking, copyrighting and patenting. This can include anything from the names, branding and logos, as well as designs or even ideas, which can cover anything from an idea about how to build machinery, plant or equipment to building certain software or even inventions. Given that such things may be the basis for the starting of a business, protecting the related entitlements and interests legally is very important indeed and can prevent the loss of IP to another company as well as any costly re-branding that may occur if a business fails to secure a business name, logo etc at the outset.
The way in which a start-up is structured – whether as a partnership, company, trust, etc. – can have a large bearing on how assets are used and divided, which can effect overall profitability and determine how secure it is financially. Part of the role of a commercial lawyer is to determine the most beneficial means of structuring the enterprise with respect to the number and value of assets, the parties involved and various other factors. It is of upmost importance to speak to a commercial lawyer when determining the best way to go and planning, particularly when the business starts to expand and grow. Understanding not only what you are trying to achieve in the start up phase but also anticipating requirements down the track is a all a part of developing the best overall structure for your business and of course a focus on tax minimisation is always at the forefront of Usher Levi’s corporate team when advising clients.
Frequently startups are structured in such a way that two or more partners contribute to the investment, with the expectation that things will run smoothly into the future.
In the initial stages, often it is the case that little thought is given to how things will work out if there is some disagreement and things don’t work out. Commercial lawyers can help protect the interests of all parties by planning for such events and ensuring that if certain parties are inclined to leave, the process will be as straightforward and painless as it can be and, if possible,the business can continue without financial burden.
There is a long list of ways a commercial lawyer can positively impact and add value to a business, at just about every stage of the business’ life. Working with quality commercial lawyers is an important part of managing a successful business in just about every industry. Usher Levi has extensive experience in the Corporate sector and can assist you in developing strategies to maximize your profits and seek the right legal advice proactively to avoid costly restructures or claims down the line.
Please note the information contained in this article is merely a guide and does not purport to provide a full explanation of the law or provide legal advice. This firm cannot take responsibility for any action readers take based on this information. We would be happy to assist you with any corporate or business related issues you may have, please get in touch via firstname.lastname@example.org or (07) 3087 3463 and one of our experienced commercial lawyers will respond to you.
Directors Beware: Criminal Liability May Arise From Breaches By The Company
The decision in ACCC (Australian Competition and Consumer Commission) v Davies  FCA 1017, shows that directors may open themselves to personal criminal liability for any breaches that may have been committed by the company. The judgment of Reeves J in the Federal Court of Australia is also an important reminder to directors that their actions may result in gaol time for any failure to comply with a statutory notice.
Robert Paul Davies was the sole director and shareholder of Natural Food Vending Pty Ltd (NFV). The ACCC alleged that Mr Davies had committed an offence under s 155(5)(a) of the Trade Practices Act 1974 (Cth) (the TPA) by aiding, abetting, counselling or procuring NFV’s failure to comply with a notice issued to the company under s 155(1) of the TPA (the notice).
Notice was served to NFV at its registered office on 10 November 2010, and Mr Davies was personally served with the same notice the following day at his place of residence. The notice required NFV to provide certain information and documents relating to a number of claims made by NFV in relation to its business. The company failed to comply with the notice requirements when it did not provide the required information to the ACCC by 2pm on 1 December 2010.
There was no dispute that NFV had failed to comply with the notice by the stated deadline that was contrary to s 155(5)(a) of the TPA.
A charge was made against Mr Davies stating that NFV had committed an offence against s 155(5)(a) of the TPA by failing to comply with the notice issued under s 155(1) of the TPA. Therefore, the ACCC claimed that Mr Davies had “aided, abetted, counselled or procured the commission” of NFV’s offence, and as a consequence, under s 11.2(1) of the Criminal Code 1995 (Cth) (the Code), Mr Davies was deemed to have committed an offence against s 155 of the TPA.
The ACCC in support of the charge stated that Mr Davies was served notice at both the registered office of NFV, and also personally at his residential address.
On 30 November 2010, Mr Davies met with Peter Ngan signing documents appointing Mr Ngan as liquidator of NFV which took effect on 1 December 2010. Mr Davies failed to inform Mr Ngan of the s 155(1) notice or the interest of the ACCC in NFV, and as a result, the company missed its notice deadline and was therefore in breach of s 155 of the TPA.
The Court outlined three elements that the ACCC had to prove beyond reasonable doubt, which were (at 35):
(a) NFV committed an offence against s 155(5)(a) of the TPA by failing to comply with the notice under s 155(1) of the TPA: as per s 11.2(2)(b) of the Code;
(b) Mr Davies in fact aided, abetted, counselled or procured the commission of that offence by the NFV: as per s 11.2(2)(a) of the Code; and
(c) Mr Davies intended that his conduct would aid, abet, counsel or procure the commission of the offence by NFV: as per s 11.2(3)(a) of the Code.
Focusing specifically on the failure to comply with the notice by the designated deadline, Reeves J found that NFV had committed an offence against s 155(5) of the TPA by failing to provide notice by the deadline. Section 11.2 of the Code states that a person is guilty of the relevant offence if:
(1) A person who aids, abets, counsels or procures the commission of an offence by another person is taken to have committed that offence and is punishable accordingly.
(2) For the person to be guilty:
(a) the person’s conduct must have in fact aided, abetted, counselled or procured the commission of the offence by the other person; and
(b) the offence must have been committed by the other person.
(3) For the person to be guilty, the person must have intended that:
(a) his or her conduct would aid, abet, counsel or procure the commission of any offence (including its fault elements) of the type the other person committed; or
(b) his or her conduct would aid, abet, counsel or procure the commission of an offence and have been reckless about the commission of the offence (including its fault elements) that the other person in fact committed.
(3A) Subsection (3) has effect subject to subsection (6).
Ultimately, Reeves J found that by the omission of not complying with the notice, Mr Davies had aided and abetted, counseled or procured the offence by NFV and based on his conduct, had demonstrated the intention to do so. There was no evidence to show that Mr Davies had taken any action to comply with the notice, but rather, Mr Davies was willing to pay Mr Ngan a significant amount of money to ensure that the (at 47) “problem would pretty much go away as far as the ACCC investigation goes”, and instructing Mr Ngan to liquidate the company.
The case is illustrative that a person may find they are criminally liable if they are judged to have aided in an offence, and failing to comply with statutory notice.
This article or the information contained therein does not purport to provide a full explanation of the law, give advice or any guidance to anyone in connection with corporate law, director’s duties at law or otherwise or any other issue and this article is not to be used by anyone to support their legal position or otherwise. For clarification purposes and further to the above this article does not purport to be advice in any regard. This firm cannot take responsibility for any action readers take based on this information. We would be happy to assist you with any corporate, commercial, construction and engineering, building, property, real estate, development or related legal issues you may have, please get in touch via email@example.com or telephone our Brisbane office on (07) 3087 3463, Sydney office on (02) 9293 2546 or Sunshine Coast office on (07) 5413 9270 and one of our experienced lawyers will respond to you.
A “note” to corporations: Be aware of the indemnities granted to officers
In Note Printing Australia Ltd v Leckenby  VSCA 105, the Victorian Court of Appeal upheld the decision made in Leckenby v Note Printing Australia Ltd  VSC 538 requiring a company to indemnify its former Chief Executive Officer, John Leckenby, from the legal costs and expenses incurred in defending criminal proceedings made against him. The Victorian Court of Appeal decision provides some comfort to directors who are seeking some form of indemnification or financial assistance when awaiting the outcome of litigation.
Digital Communication and the Formation of Contracts
In the digital world we now live in it is prudent to give due consideration to the numerous emails that are sent everyday; could you be unwittingly entering into a binding contract?
Company directors may take heart from Mariner decision
Justice Beach in Australian Securities and Investments Commission (ASIC) v Mariner Corporation Ltd  FCA 589 had to consider questions relating to the statutory business judgment rule as outlined in s 180(2) of the Corporations Act 2001 (Cth) (the Act), and some light was shed as to how the courts may approach questions of whether directors have breached the duty of care and diligence as stated in s 180(1) of the Act. What is of particular interest in relation to the decision of Beach J, was the emphasis on a more business friendly approach in his Honour’s decision which is worth noting for company directors.
The Western Australian Supreme Court of Appeal decision in Westpac Banking Corporation v Bell Group Ltd (in liq) [No 3]  WASCA 157 shone a spotlight on the issue of the fiduciary duties owed by directors to act in the bona fide interests of the company, and for proper purposes. Although Bell was settled before the High Court was able to determine whether the bona fide and proper purposes rules formed part of the fiduciary duties for directors, a closer look at how the rules fits within corporate law is worth further exploration.
In Carter v Delgrove Holdings Pty Ltd  FCCA 783, the Federal Circuit Court had to determine whether the respondent engaged in misleading or deceptive conduct under s 18 of the Australian Consumer Law (the ACL) by first submitting the successful bid for a residential property in auction, then refusing to proceed to settlement.