Commercial Law FAQ

I am the Director of a Company. Is there a possibility that I will be personally liable for the debts of the Company?
A Director has certain obligations that you will need to be aware of including ensuring that the company is not trading while insolvent (in which case a director may be personally liable for the debts of the company).  We recommend that you consult a solicitor to ensure that you are aware of the obligations imposed on you as a Director and also to discuss how you can protect yourself against potential liability.
I am thinking of starting a business.  What structure should I use?
The primary business structures used in Australia include:
(a) a partnership;
(b) a corporation;
(c) a trust; or
(d) a sole trader business

Each has advantages and disadvantages. When choosing the correct form for your business the core focus should typically be on personal liability and tax implications (in relation to which we engage the assistance of tax experts).
I want to purchase a business but do not know whether I should purchase the assets of the business or the shares in the company that owns the business. Please advise.
This will depend both on what presents the best outcome for you from a tax perspective as well as a legal/risk liability perspective. Purchasing the shares in a holding company generally leads to a greater level of risk being assumed by a purchaser, as a purchaser would be liable for all past liabilities of the company. A carefully drawn agreement is required to mitigate your liability in this regard.
How do I protect the assets of my business?
This depends primarily on the nature of your business and the assets of the business.  You should also consider whether the business has any intellectual property that needs to be protected, noting that registration of a business name will not be sufficient protection for the IP of the business.
Do I need to give a Disclosure Statement when selling my business?
A disclosure statement prescribed by section 52 of the Estate Agents Act (1980) (Vic) is required for the sale of a small business valued at up to $350,000. If you are selling your business for a greater amount, then no disclosure statement is required.
How does the Victorian State Budget 2017-18 affect me?
From 1 January 2018 new laws will apply with regard to vacant residential property tax. Unless an exemption applies, owners who leave their properties vacant for more than 6 months in any calendar year will be required to pay an additional tax at a rate of 1% of the capital improved value of the property.

Another key change relates to "off-the-plan" stamp duty concessions. From July 2017, this will only be available for home buyers who:

• qualify for the principal place of residence stamp duty concession; or

• are eligible for the first homebuyer stamp duty concession.

As a result of these changes, investors will face increased stamp duty as they will no longer be entitled to receive off-the-plan concessions.

These matters should be considered carefully in business and financial planning.
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