NSW Business and Companies

“ Contents ”

“ Australian Competition and Consumer Commission (ACCC) Australian Securities and Investment Commission ”

“ Business and Franchise Companies, Trusts, Partnerships and Superannuation ”

“ Taking good instructions When receiving instructions from the client, the use of the precedent Retainer Instructions is a very useful risk management tool. It prevents overlooking important issues and records instructions which cannot be contradicted later. ”

“ The sale of a business normally involves: the sale of tangible assets such as plant and equipment; ”

“ Consideration of the tax payable by a vendor is an essential task that must be undertaken prior to the sale of any business assets. The planning may well result in the decision that the business should not be sold at all but rather the purchaser should be required to acquire the entity that owns ... ”

“ There is an opportunity to save your clients money by structuring the sale of the business in the most tax advantageous manner. This opportunity arises because of the possibility of different rates of tax. The rates of tax payable differ depending on the nature of the asset – whether the asset is a ... ”

“ Some preliminary issues that may need to be considered and agreements that a vendor and purchaser may enter into before or while negotiating the terms of the purchase contract follow. The heads of agreement for sale are negotiated based on limited information provided by the vendor either directly ... ”

“ Usually a vendor, or their agent, will require prospective purchasers to enter into a confidentiality agreement often called a non-disclosure agreement before financial and other information about the business is disclosed. Sometimes this is required by brokers before even the name of the business ... ”

“ It can be highly advantageous to the prospective purchaser, particularly in a strong market or with an attractive business, to negotiate a period of exclusivity. During this period the vendor will not be able to negotiate with anyone else. This will allow the purchaser sufficient time to conduct ... ”

“ Having agreed in principle on the key terms of the purchase and before beginning the process of due diligence and the drafting of the agreement, a general understanding of the key terms of a complex transaction might be set out in a Heads of Agreement which although not binding serves to record a ... ”

“ Due diligence by the purchaser generally involves making reasonable investigations before deciding to enter into any investment so as to minimise, or at least understand, any risk involved. For a purchaser this means making all possible enquiries to ensure that the position with the ownership, ... ”

“ Unlike real property, there are no disclosure requirements except in relation to the assignment of a retail lease. In order to achieve a successful sale it is therefore important to anticipate the concerns of the purchaser and to provide all relevant information. The Law Society contract lists ... ”

“ There is no prescribed form for a contract for sale of business. As with conveyancing, the agreement for sale of business is normally drafted by the vendor’s legal representative. However, unlike conveyancing, there is no requirement that the draft contract be made available before or during ... ”

“ The By Lawyers Uniform Contract for Sale of Business is widely used. It uses uniform terms and conditions, with all additions and variations made in the transaction summary. ”

“ It is sometimes agreed that the company that owns and conducts the business will be sold rather than the business itself. This involves the sale of the shares of the company, rather than the sale of the company’s assets. Whilst there may be savings in stamp duty and possible tax and other ... ”

“ Apportionment of the sale price – Depreciation It is customary, but not necessary, for the contract to show an apportionment of the sale price between the various assets that make up the business. Normally, the apportionment will be confined to identifying the part of the price attributed to plant ... ”

“ Where the business includes motor vehicles the contract can and should specify them and provide for their formal transfer via Transport for New South Wales (TfNSW). Although there is no stamp duty on business sales, duty is payable on the transfer of motor vehicles even if as part of a business ... ”

“ The transfer of a liquor licence can be quite complex. The most sensible place to start would be the Liquor & Gaming NSW Transfer your licence page. Liquor fact sheets may be of assistance. ”

“ The contract should provide for the transfer of rights to any domains, websites, email addresses and social media accounts which are key assets and marketing tools of the business. Domains, websites and email addresses ”

“ If the business has employees the purchaser may or may not want those employees to continue and the employees may or may not wish to do so. As an employment relationship is personal between an employer and employee, under general contract law principles the employment contract cannot be ... ”

“ Every business name must be registered unless the proprietor is trading under their own name. Although business names are not strictly ‘intellectual property’ in the sense that trade marks are, it is clear that they can have substantial value. The sale of a business will usually include the ... ”

“ The sale of a business will usually include the assignment of any trade marks from the vendor to the purchaser and the By Lawyers Uniform Contract for Sale of Business provides for this by requiring the vendor to provide to the purchaser duly executed transfers of all business intellectual property ... ”

“ The objective as always is to incur the minimum tax liability arising from the sale. The tax rates applicable to the proceeds of sale depend on whether the asset sold is a revenue asset or a capital asset. Revenue assets are generally stock, and plant and equipment. Any taxable gain is taxed at the ... ”

“ Example 1 – Tax advantages of a vendor selling shares Tax advantages of a vendor selling shares in the company rather than the company selling the business ”

“ Agreements The sale of a business will usually include the assignment of any contracts relevant to the business from the vendor to the purchaser and the By Lawyers Uniform Contract for Sale of Business provides for this by requiring the vendor to provide to the purchaser assignments of all ... ”

“ As far as time for completion is concerned, the contract stipulates a completion date, which is not of the essence and provides for a notice to complete. If time is essential, for instance just before Christmas trade, then a special condition is required and one is found in the library of special ... ”

“ The contract may provide for various conditions to be met before the sale can be completed. Vendor training of the purchaser is a common one. There may also be the need to transfer a licence, such as a liquor licence, before the purchaser can start trading, or for the assignment of the lease. ”

“ The transfer of a liquor licence can be quite complex. Probably the most sensible place to start would be the NSW Office of Liquor and Gaming. The relevant forms are found in the matter plan. ”

“ So far as time for completion is concerned, the contract stipulates a completion date, which usually is not of the essence but can be made so by a notice to complete. If time is important – for instance, just before Christmas trade – a special condition making time of the essence can be found in ... ”

“ Depending on the type and size of the business it will be necessary to adjust some of the following: rent and outgoings; ”

“ Transfer registration of motor vehicles Transfer software licences and domain names ”

“ When finalising a matter it is important to terminate the retainer by sending a letter to the client reporting on the matter and accounting for the proceeds of sale. This informs the client in writing that all work on the matter is complete and that no further work will be undertaken unless the ... ”