A commercial lease will be daunting for any party that has not entered into one before. A typical lease agreement can be up to 50 pages covering many topics including rent, outgoings, repair and maintenance, demolition, insurance, and assigning the lease to a third party.

Because of its complexity, most people should, and prefer to, obtain legal advice. And also because of its complexity, there can be long haul of nitpicky negotiations between the landlord and the tenant on the terms of the lease. This inevitably leads to increased legal costs and then the question arises: can I pass my costs to the other party?

These acts cover most, but not all, retail leases.in NSW and ACT: the Leases (Commercial and Retail) Act 2001 (ACT) in ACT (‘ACT Act’) and Retail Leases Act 1994 (NSW) in NSW (‘NSW Act’).

ACT – each party bears its own costs

 For subleases under the ACT Act, the tenant and the landlord bear their own legal costs for the preparation of the sublease. Hence should the legal costs increase due to extensive negotiations between the parties, each party will have to pay their own legal costs. A landlord can’t require a tenant to pay the landlord’s preparation or negotiation costs.

It is also important to note that the landlord must not nominate a lawyer for the tenant. The tenant should obtain independent legal advice from a lawyer that it chooses. If the Landlord nominates a lawyer, in certain cases the landlord may have to pay for the tenant’s legal costs.

NSW – similar to ACT with one small exception

The law in NSW since 2005 is similar in that the tenant and the landlord bear their own legal costs for the preparation of a lease under the NSW Act. The landlord may incur penalties for requiring the tenant to pay.

There is one minor exception to the above, where the landlord can pass on the costs of negotiating and making any changes the tenant requests – but only:

• Changes that were not already agreed between the tenant and landlord (which the landlord neglected to include); and
• If the changes are requested after the tenant gives their disclosure statement to the landlord.

 

What should you do?

To keep your costs to a minimum, you should do as much as you can to negotiate the basic terms yourself before lawyers are involved. This means talking direct to the landlord, or their agent, and if possible you should write out the agreed terms for their lawyer to ensure they are captured in the lease itself. Then there will be less for your lawyer to have to fight about.

In NSW, you should hold on to the tenant’s disclosure statement until you are ready to sign the lease, and negotiate as much as you can before a lease is prepared.

See us if you have any questions

Lease agreements can be difficult and complicated for both the landlord and the tenant. You should always seek legal advice before entering into a lease to ensure that you have legal protection and know what you are signing. If you have any questions, please contact 6125 9100 to book an appointment with the experienced lawyers at Chamberlains Law Firm.

Part 1: What is a Public Examination?

A public examination is a process where an examiner, more often than not a liquidator or trustee in bankruptcy, however from time to time ASIC or AFSA itself, will examine a person about their own or their company’s examinable affairs. It is an open examination in court, and the process can be extremely stressful for those being examined. In this and the following 2 articles, we explain what a public examination is, how it is conducted and what you can expect.

What is a public examination?

It is essentially a process where you will be asked a series of questions by the examiner about an insolvent company’s affairs or the affairs of a bankrupt. It is an inquisitorial process, and it is significantly different to the traditional adversarial system because there is nothing to prove or disprove. A judge has a limited role in guiding the examination and they do not make any decision. It is purely a fact-finding mission. Hence it is up to the examiner to ask the relevant questions as they see fit, and use the information that they gather in the same way.

What types of public examinations are there?

The vast majority of examinations occur in connection with corporate insolvencies, so the next section of this article will deal with such examinations specifically. Namely, there are mainly two types of public examinations under the Corporations Act 2001 (Cth):

• Mandatory examinations under section 596A; and
• Discretionary examinations under section 596B.

 

For each type of examination, the court must be satisfied that conditions in the Corporations Act are met. The same process applies in how an examination is conducted, whether it be mandatory or discretionary.

Why am I summoned for a public examination?

It is likely that an insolvency practitioner applied for the examination because a company is insolvent and you, or someone close to you, were involved in the affairs of that company. The insolvency practitioner will seek to fill in the missing gaps in their information or to find new information.

Examinations are thus normally conducted where:

• there is a general need to gather more information due to insufficiency or complexity of the information; or
• it is difficult to obtain information because of uncooperative persons or the relevant documents are not available.

 

Information that you provide will assist the insolvency practitioners in their administration of the insolvent company. Ultimately, they seek to maximise benefits to the creditors and they will seek to investigate and track assets that they can sell or otherwise interrogate the value of prospects of success of claims they may pursue. The information provided may also help them to locate and recover assets that may have been unlawfully transferred.

Who can attend the examination?

An examination will be public unless in special circumstances the court orders that it be private..

Can a lawyer assist in public examinations?

You have the right to be represented at the court during the public examination. The process is likely to be stressful as it is a formal court process and especially if you do not know what you have to expect. The examination will often be associated with a production of large quantity of documents. In some cases, they may seek to litigate from the information gathered. We advise that you engage a lawyer early on to ensure that you have sound legal advice from the beginning.

Article by Stipe Vuleta & Steven Lee

Business owners can run into difficulties when operating from leased premises, such as:

• Disputes with your landlord over rent increases, repairs, extensions; or
• A landlord can prevent you selling your business by refusing to agree to your proposed buyer.

 

An option for business owners to avoid these pitfalls is to purchase their premises through their Self Managed Super Fund.

When Can An SMSF Purchase Business Premises

There are two circumstances in which you might want to use an SMSF to purchase business premises.

1. You do not currently own premises

Provided that the purchase of commercial property makes sense for the fund, there is nothing preventing your SMSF from purchasing a property for your business.

You should note however, that there are limits on the capacity of an SMSF to borrow funds to purchase property (in the event your fund does not have sufficient capital).

2. You currently own the premises from which you run your business

If you already own your business premises, you won’t have the problem of your landlord cramping your style. However it can still be financially beneficial for you to consider transferring or selling the premises to your SMSF, particularly given:

• The rent generated will be subject to a low maximum tax threshold; and
• The payments made by your SMSF to you are also subject to low taxation.

If you currently own the premises from which your business is run, you can either:

• Transfer the asset as an in specie contribution, however in doing so you must be aware of any contribution limits; or
• Sell the premises to your SMSF. This sale must be at arms length, not conflict with the sole purpose test (of providing benefits to fund members) and comply with the investment strategy formulated by the SMSF.

 

What Sort of Premises

In all circumstances the premises must be “business real property”. This is because the SMSF will need to enter into a lease arrangement with your trading entity, which is a related party.

To be “business real property”, two basic conditions must be satisfied:

• The ownership must be an eligible interest in real property, being a freehold or leasehold interest in real property or any other interest in Crown land that can be assigned or transferred; and
• The property must be used “wholly and exclusively in one or more businesses”. This business use test will be easily satisfied where the business itself is the only user of the land. Most people run into difficulties if they live at the premises from which they run their business.

 

Benefits

• The SMSF can lease the property to your business, provided this lease is on commercial terms. Importantly, this rental income is taxed at a lower rate (maximum 15%).
• Any potential capital gains tax on the future sale of the property will be minimised (maximum 15%).
• You will avoid disputes with your landlord, and you will not be vulnerable to the possibility of a landlord not renewing your lease.
• In the event of financial difficulty, creditors may find it more difficult to access an SMSF’s assets than the assets of your business.
• You do not tie up your business capital in the property.

 

Things To Be Aware Of

• An SMSF cannot directly borrow to finance its purchase of business premises. However, there are mechanisms for SMSFs to borrow money in certain instances, often through a limited recourse borrowing arrangement.
• Stamp duty will likely be payable on the transaction.
• There are caps on the contributions that can be made to a SMSF, and you must be careful when transferring property that its value does not breach these caps.
• The relationship between your business and your SMSF must be at arms length. Therefore, you should have a formal lease document in place and pay market value rent.
• Purchasing business premises may limit the diversity of your SMSF, and expose it to vulnerability, for example if the property market plummets.
• You should consider if, or, how your business is likely to grow and if so whether the premises will remain viable.

 

If you would like to purchase your business premises through your SMSF contact our Commercial Property Team for advice and assistance.

What is Copyright?

Copyright is one of the main intellectual property protections in Australia and is the most common and appropriate form of protection available for literary, musical and artistic work. It is automatic and it is free.

Other intellectual property protections include:

• Patents are used for inventions such as a device, a method, a substance or a process. Once granted, it has a time limit.
• Trade marks will distinguish your business from your competitors. It is a protection for a letter, number, word, phrase, sound, smell, shape, logo, picture and/or mode of packaging that you use to sell your product. And
• Confidentiality / trade secrets is an alternative to patenting your invention which requires you to simply keep it a secret. You use a strict confidentiality regime with employees, business associates, and manufacturers, to keep your process, product or ingredients from the public domain.

 

How it works

You have copyright protection the moment you create your artistic work, subject to it being original, properly documented and complying with relevant law. It is automatic in Australia and there is no requirement to register or apply for copyright protection.

This protection comes from the Copyright Act 1968 and gives you the exclusive right to the work, and to license others in regard to copying, performing or publishing the work in public. Such protection and rights differ for different kinds of literary or musical work.

It is important to note that copyright doesn’t protect you against independent creation of a similar work. Also note that there is no copyright in ideas or information.

Deterring potential infringers

A copyright notice on your artistic work is not necessary to give you copyright protection, however:

• it can be an effective deterrent to potential infringers of copyrights; and
• it can help prove your ownership of the copyright.

 

The Attorney General’s office provides the following wording as appropriate for use in copyright notices:

This work is copyright. Apart from any use permitted under the Copyright Act 1968, no part may be reproduced by any process, nor may any other exclusive right be exercised, without the permission of [name and address of copyright owner and the year in which the work was made].

Proving ownership of copyright

In most legal cases, the question of ownership of copyright is not in dispute. However when this occurs, you will need evidence to demonstrate that you created the work. You might ask people who were involved in or who knew about the creation of the work to support you, and you can use drafts and other records to show that the work is yours. It is therefore important that you keep drafts and records of all your work, and that you record dates and details of creation, etc.

Duration of copyright

Depending on the material, copyright for literary, dramatic, musical and artistic works generally lasts 70 years from the year of the author’s death or from the year of first publication after the author’s death.

Copyright for films and sound recordings lasts 70 years from their publication and for broadcasts, 70 years from the year in which they were made.

The internet and social media

Technology means that it is less common for authors to engage with a publisher to print a hard copy book or to publish an article in a controlled fashion. Literary works are posted on the internet all the time and are then “republished” (shared, re-tweeted) across the world.

Australia’s copyright protection still applies to these writings in Australia if they fulfil the basic requirements of copyright (being original). Generally the way in which you post means that you authorise the republication of your works (because you want the world at large to see it) however this does not diminish your copyright protection in Australia. The work should remain yours and not be credited to others. The copyright wording mentioned above will assist in crediting the work to you provided that it remains part of the shared content. You could create additional protection by including terms of use in the wording – for example, granting permission for your work to be shared but only if it is always credited to you.

Some countries have agreements with Australia regarding copyright protection but many others do not. To adequately protect your IP in another country you will need advice from IP professionals – either Australian professionals with international expertise, or engaging an IP professional in other countries.

A recent example – Dallas Buyers Club

Recent media attention to the illegal distribution of the Dallas Buyers Club film shows that the Federal Court of Australia is taking very seriously the rights of copyright owners in films. American companies alleging ownership of the copyright in this film have commenced proceedings for copyright infringement and may have a right to sue persons who used BitTorrent to illegally obtain the film. The Federal Court has ordered that six Internet Service Providers disclose the identity of over 4000 account holders where the movie has been downloaded to the account holder’s IP address without authorisation. The information will not necessarily identify the individuals who have illegally downloaded the film, but the American copyright holders are arguing at this stage that the accountholders may be able to help them identify the actual infringers.

Definitely a case to watch with interest.

Disclaimer: Please note that this article does not constitute legal advice and you cannot rely on this information as legal advice. This article is for the purposes of information only. If you wish to acquire legal advice, you must consult with a lawyer.

 

The potential upside of voluntary administration in light of a recent surge in ATO wind-ups is outlined in this article on Creditor Watch by Stipe Vuleta – Managing Director and Practice Leader of Dispute Resolution, Insolvency & Reconstruction, Chamberlains Law Firm.

https://creditorwatch.com.au/blog/recent-surge-in-ato-wind-ups-directors-failing-to-consider-the-utility-of-voluntary-administration/

 

 

 

Running a business is tough at the best of times.

In an environment of uncertainty about the economic future of the country, the government has made boosting the confidence of Australian small business the focus of its 2015 budget.

The Australian Chamber of Commerce and Industry (ACCI) was quick to come out and endorse the key initiatives of the budget, believing they will give small businesses “the confidence they need to grow, invest and hire new staff.”

Kate Carnell, CEO of the ACCI, said: “This budget recognises that it is business, not government, that generates wealth, creates jobs and grows the economy. It shows the government has heard the message of the chamber movement’s Small Business. Too Big to Ignore campaign.”

The “Jobs and Small Business Package” is expected to help the estimated 2 million small businesses in Australia, and the millions of people they employ, with over $5.5 billion in new tax relief and reduced compliance costs.

The government will implement a 1.5 per cent company tax cut for small businesses it had previously announced earlier in the year. Companies with turnover under $2 million will be eligible for this cut, and a 5 percent tax discount to be worth up to $1,000 a year will be available for other businesses.

There is now an immediate tax deduction for assets up to $20,000 until the middle of 2017, with the government putting no cap on the amount they are prepared to spend.

Small business work-related portable electronic devices will become fringe benefits tax free in an effort to reduce red tape.  The government will also be streamlining business registration processes and the removal of obstacles to crowd-sourced equity funding.

Ms Carnell went on to say they should move quickly to bring legislation to the Parliament to enact the initiatives laid out in the budget.

“We welcome these small business measures and encourage the Opposition to support them.”

When running a business it is important to build a culture where employees feel their boss puts staff needs ahead of those of management.

According to a recent study, companies with this style of leader see better job performances from employees, a lower rate of staff turnover and even measurable improvements in customer satisfaction .

The study, published in the Academy of Management Journal, found when bosses build a corporate environment of trust, caring, cooperation, fairness and empathy, employees respond to this and feel more valued at their job.

In turn, they are more likely to give back to the company and its customers through greater loyalty and improved job performances.

Employees are better able to reach their full potential if they have a boss who is a “servant leader”. According to one of the authors of the study, leaders who bark commands at their staff are unlikely to see the same positive results as those who ask what they can do to help their greatest business assets.

A popular brand of deli stores in the US was used for the research, with those using servant leader models of management seeing 6 per cent higher job performance from staff. Workers were also found to be 50 per cent less likely to want to leave the company while customer service behaviour rose by 8 per cent.

Staff who came to admire the attitude of their boss created a better workplace and improved the level of teamwork among employees. They also had greater loyalty and dedication towards the company.

“It’s contagious. The employees see their leaders as role models and often mimic those qualities, creating a culture of servant leadership. This serving culture drives the effectiveness of the business as a whole,” said Sandy Wayne, one of the authors of the research.

Deep down every manager knows they won’t be running a business until the day they die. That is why it is very important to have a succession place in make sure the transition from one leader to another is smooth and the business is not adversely affected by this move.

According to research from recruitment agency Hays, many businesses say they haven’t got the resources to worry about succession planning, and the cost of losing someone in a key role is increased in a small companies making managing this risk worth the time and effort.

Have a plan in place – stick to it

Planning is always the best way to handle an issue like succession. By developing a well-structured succession plan into the strategy of your business, many of the risks associated with a transfer of leadership can be avoided.

Creating one well in advance of your departure is always more likely to succeed and is create more long-term value than one that is simply allowed to continue without a plan.

According to the NSW Business Chamber, having a succession plan in place has a number of benefits for a business. The Chamber states, “it helps you to attract and retain the best staff who are committed to the business, which in turn should result in increased productivity and loyalty”.

A succession plan clarifies for everyone who is in charge and who can make key decisions. Plus, it ensures you have someone to handle emergencies if your star performer suddenly needs to take extended leave.

Don’t cut ties and run – stay connected 

Even once you have started at your new job, you shouldn’t lose contact with your former colleagues. If you left your job on good terms, this should not be too much of an issue.

According to Hays, because the business community can be a small one, it is were important you do not lose those relationships you developed at your old job. This is especially true if your former employees are now in a position of leadership. They may need your help and this is a good way to keep your legacy intact with the business.

“Everyone leaves an organisation at some stage,” says Hays CEO, Alistair Cox. “It’s your job to make sure that the organisation doesn’t miss a beat when your own time comes. And if you do it well, not only will you leave the organisation with your reputation intact, you will actually leave with your reputation enhanced,” says Mr Cox.

Research by Robert Half has found that almost two thirds of Chief Information Officers (CIOs) are turning to technology recruitment to feed the demand of new projects. In turn, Chief Financial Officers (CFOs) are allocating areas of the budget to purchase new software and systems to boost productivity and innovation.

“The majority of Australian businesses are small to medium in size, and this is currently the most active sector for new projects. SMEs are nimble and flexible, and can adapt more readily to the economy”, commented Robert Half Director Andrew Brushfield.

“Technology is no longer perceived as a cost centre, but rather a vehicle to improve productivity and drive revenue gains”, added Mr Brushfield.

SMEs are currently investing in technological software to improve and streamline a vast range of business operations. In the current global market, running a business can greatly benefit from adopting a range of helpful software such as customer relationship management systems. With the growth in technology use within SMEs, it is no longer uncommon for the CIO and CFO to work collaboratively and on the same level.

With an increasingly digital landscape in international trade and commerce, businesses need to maintain a competitive advantage through excellent IT skills.

This is particularly important for retail profits from sales in Australia, as the eWAY Q1 2015 Online Retail Report found that the e​-commerce sector is outperforming its bricks and mortar counterpart. There has been a 22 per cent increase in transaction volumes in Q1, compared to the previous corresponding period.

As a result of the importance of savvy websites and efficient IT systems for processing online sales, the demand for IT staff is on the rise. If businesses are currently thinking about employing IT professionals, there are useful legal services online such as digital libraries of employment law documents and service contracts. Moreover, commercial lawyers can help SMEs with a range of technology-relevant activities such as managing storage of personal information, privacy policies, responding to cyber-attacks or drafting consumer use policies for their e-commerce sites.

As most start-ups would know, seeking funding is critical for launching a business and venture capitalists can play a key part in this process. Between 2013 and 2014, a total of $18,514 million was committed by investors according to the Australian Bureau of Statistics, with 73 per cent of this amount sourced domestically.

Such significant amounts of funding offer great potential for start-ups to strategically approach investors and sell them on the idea of their business. With this in mind, this article provides some tips for approaching venture capitalists and managing the process.

The pitch process 

Starting a business requires careful planning, yet sometimes even the best laid plans don’t progress very far without a solid pitch to inspire financial backing. Developing excellent communication skills goes a long way for pitching the ideas and products to venture capitalists.

Venture capitalists are often a group of professionals who are usually industry experts, successful business leaders or investors willing to back the start-up with significant funding – provided they believe in the idea. Therefore, the pitch is in many ways the bread and butter of a start-up.

Public speakers finesse their skills by pre-preparing key points and practising delivery in front of an audience, and then take on board feedback to refine their speech. Adopting a similar method before meeting with the venture capitalists is recommended. Start by pointing out the value of the idea, as time is a limited resource and establishing the worth of the concept immediately can help win rapt attention.

It can be beneficial for CEOs to bring one or two staff to the meeting, to present a collaborative approach as venture capitalists invest in teams as opposed to individuals. Delegating segments of the presentation to the staff responsible for that project also helps. Rehearse the presentation as a team.

Ultimately, it is important to maintain an optimistic mentality. Having a steadfast belief in the business’s core offering or innovative idea shines through in a pitch, and shouldn’t fade even if ‘no’ is heard a few times. Richard Branson famously said “business opportunities are like buses, there’s always another one coming” so keep boarding the bus.

The legal process

Throughout the launch and growth stages of a start-up, expert commercial lawyers can offer customised tax and corporate advice. One of the key components of this is venture capital, and commercial lawyers can assist with documentation such as informal offer documents, registered offer information statements and registered prospectuses.

Showing venture capitalists that the start-up has its ducks in a row and uses the proper legal channels in each step can help cement a good first impression. Moreover, given that commercial lawyers can draw on years of experience working with start-ups from a vast array of industries, consulting with them helps to construct a bespoke plan for attracting capital.