A shareholder is someone who owns one or more shares of stock in a company. They get to benefit from the company’s earning and assets but they also share liability if the company owes money or goes bankrupt. While the Corporations Act does not require companies to have a Shareholders Agreement, having one can be beneficial for setting ground rules about issues that affect shareholders, such as one shareholder deciding to sell their share later, where the conditions for doing so, have already been worked out in a signed Shareholder Agreement. A Shareholders Agreement is best prepared at the start of a business when all parties are enthusiastic and there have been no disputes or disagreements over the running of the business.

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A Shareholders / Partnership Agreement covers the funding, structure, management and direction of the business. It outlines the responsibilities and obligations of the business owners. It is designed to deal with the issues that may arise during the life of a business, by determining in advance, how such issues should be dealt with. The process of developing a Partnership/Shareholders Agreement and the content included will differ between each entity after discussion and input involving all the relevant partners/shareholders and their relevant advisers.

The process of buying or selling a business can be challenging if you do not have any appropriate exposure in business before. You therefore need to carefully analyse the procedure of buying or selling a business.

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There are few steps involved before you buy or sell a business. These steps will give you a fair idea regarding what needs to be done before you actually start the process.

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In the sale of a business, all equities, liabilities, profit & loss statements, tax returns, ownership, and other information of the business will be reviewed. So, the seller needs to have the information ready.

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The buyer of a business must be able to genuinely prove that the buyer can afford to purchase the business by ensuring financing, lines of credit and/or shore up cash positions.

The “joint venture” is a relationship between two or more parties, who agree to undertake some enterprise for a profit, but where their individual identity as separate parties remains. In this regard, it is distinguished from the “partnership” where partners take a share in the profits of the common enterprise. In the joint venture, each party will bring to the arrangement their own specific skills, talents, resources, abilities and facilities.

 

The joint venture is a common concept found in property and environmental law as it is often determined that this kind of commercial arrangement is appropriate for property developers.The joint venture agreement is determined according to the real characteristics of a contractual relationship between the parties; just because something is called a joint venture does not mean that a court will find it to be a joint venture.

 

Conversely, just because something is called a partnership does not mean that any future court will hold that is it in fact a partnership. For more information about partnerships, see our section titled “Partnership Agreement” in our “Business and Commercial Law” title.

 

The joint venture agreement can sometimes be referred by other terms and references, such as:

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• Collaboration agreement or collaboration contact;

• Co-operation agreement or co-operation contract;

• Alliance agreement or alliance contract; and

• Limited partnership agreement or limited partnership contract.

At Converge Legal, irrespective of the nature, complexity and purpose, we can help with providing advice on, drafting, negotiating and reviewing the following and other forms of contracts and deeds:

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• Partnership agreements between partners conducting a business together. We understand that a partnership agreement forms the relationship and expectations of your business moving forward, and as such, having a well-structured agreement reduces risks to the parties whilst maintaining your commercial interests.

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• Joint venture agreements, including joint ventures and strategic alliances, with the objective of providing you and your business venture partner(s) the protection needed when working together on a joint project with a common goal.

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• Consultancy agreements so as to protect the parties in ensuring terms of the agreement and employment remain contingent of your interests, including provision for a nominated executive where necessary. Whether you are a prospective consultant or are considering engaging the services of a consultant or wish to have a consultancy agreement reviewed, our team of commercial lawyers can provide you with the proper assistance.

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• Employment agreements, whether you are an employer and employee.

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• Manufacturing and supply agreements and distribution agreements, whether you are a manufacturer, supplier, distributor or purchaser, there are numerous things to consider that may require the terms of the agreement to be negotiated with the other contracting parties. These range from the duration of the agreement and the pricing structure to whether the arrangement is on an exclusive or non-exclusive basis.

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• Confidentiality Agreements or Non-Disclosure Agreements (NDA), including Mutual Confidentiality and Non-Circumvention Deeds, which often become part of many commercial deals before good faith negotiations commence between the parties with the intention of ensuring, in most cases, that each party’s highly commercial and sensitive confidential information is protected and not disclosed.

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• Information technology agreements, advertising, sponsorship and marketing rights and ensuring compliance, as we understand the importance of technology in today’s constantly evolving modern world, where businesses have a common objective of keeping up with the ever-changing technology in order to stay viable in the competitive market and their industry.

• Terms and conditions of your business and terms and conditions of use or your website, privacy policies, ensuring they are equitable and fair.
   

• Licensing agreements, whereby the licensor, being the owner of a property (real property, intellectual property or other types of property), grants a licence to the licensee to use the property for a certain period, on an exclusive or non-exclusive basis, for a certain licence fee. We are also equipped to assist you with product and software licensing agreements, understanding the importance of licensing and protecting you and your business, whilst preventing abuse of the software, considering your liability, disclaimers of use and terms of termination.
   

• Loan, mortgage and other security documents, including guarantor documents, which we understand are crucial documents and consider it significant to ensure that our clients understand their importance with clarity, purpose and direction of such legal documents, including the dire legal ramifications for breaches and non-compliance.
   

• Shareholder agreements and your Company Constitution, which if you are a director and/or member (shareholder) of a company, these documents are often considered the bible whereby the company operates and manages the relationship between its members. Having properly drafted shareholders agreement and company constitution also ensure compliance with the many requirements of the Corporations Act 2001 and regulatory bodies such as the Australian Securities and Investments Commission (ASIC).
   

• Services agreements, regardless of its nature, to ensure compliance with common clauses and protect your interests.