Blog - Hardies Lawyers

Share purchases - what documents do I need?

Mon, 01 Sep 2025 03:53:31 GMT

Buying a business by purchasing the shares in a company can often be simpler than buying the assets of the business itself.

A key reason for this is that contracts with customers, suppliers, and employees can usually stay in place. Whilst the idea of purchasing all of the shares in a private company may appear reasonably simple once you've agreed on a purchase price, as a buyer there are several important documents and steps required to ensure you obtain proper legal title to the shares and, indirectly, the business.

Share sale agreement

The longest and most detailed document you will need when purchasing a company's shares is a share sale agreement. It's very important that this document is given the attention it deserves. A properly drafted share sale agreement will, among other things, set out the following material terms:

the number of shares you will purchase;
the purchase price for the shares;
whether you will pay for the shares in a lump sum or by instalments;
any conditions that need to be satisfied before the sale can complete, for example, the landlord's consent;
the obligations on completion required to transfer legal ownership of the shares;
any warranties to be provided by the seller regarding the shares, business, and company;
any non-compete provisions preventing the seller from operating a similar business after completion; and
confidentiality and dispute resolution provisions.

Negotiation

Usually, the seller's lawyer will draft the share sale agreement, and your lawyer will review it. During negotiations, your lawyer's role is to strike the right balance between the seller's position and your position (as the buyer). More often than not, the seller's lawyer will draft the share sale agreement to be very favourable to the seller. Therefore, you should prepare yourself for several rounds of negotiations, which can take anywhere from a few weeks to a few months. A skilled lawyer will guide you through this process and explain the critical legal points.

The most heavily negotiated points often relate to what will happen if there is a breach or disagreement in the future. For example, limits on the seller's liability where one of the seller's warranties (otherwise known as promises) is untrue, and the amount of time you have to bring a claim, are areas of particular focus for the buyer's lawyer.

There are standard warranties included in most share sale agreements. However, the most important will be those specific to the business in question including, for example, the seller stating that it is not aware of any reason a customer of the business might seek to terminate a supply contract.

Due diligence

Buying a business through the purchase of shares in a company results in the buyer taking ownership of its past trading risks. This can include debts to the Australian Taxation Office and other creditors, or work done for customers.

The first step to protect yourself from any such risks is to complete a thorough due diligence on the company. This can involve both legal and financial due diligence. Your lawyer can assist by conducting searches of the company and reviewing key contracts. For example, you should ensure that the contracts adequately lock in key clients.

Your accountant or financial adviser can review the business's financial records to provide you with details concerning:

the value of the business; and
risks relating to taxation, payroll, and superannuation.

Due diligence can occur before or after you have signed the share sale agreement. If after, the agreement should include a condition precedent which allows you to walk away from the purchase if you discover anything unsatisfactory. You can also address any risks that you uncover by including additional warranties.

Completion obligations

The share sale agreement will set out various completion obligations. These are obligations that you and the seller must comply with and include documents that the seller must hand over at completion. Many of these will relate to assurances about the seller's ability to sell the shares and the company's approval of the sale. Also, there must be approval of the change in control relating to the shareholders and directors.

Generally, the following documents will be required:

Directors' resolution – a written resolution signed by the directors approving the transfer of the shares, cancellation or issue of share certificates, and any director resignations or appointments.
Shareholders' resolution – a written resolution of the shareholders approving the transfer of the shares and accepting the waiver of any pre-emptive rights.
Waiver of pre-emptive rights – the shareholders will sign this waiver to confirm that they are not enacting their rights to purchase the shares.
Share Transfer Form – a form which sets out the transfer of the shares from the seller to you (as buyer), and the purchase price paid for the shares.
Share Certificate – the seller's share certificate will be cancelled, and a new share certificate issued to you.
Appointment/removal of directors – the current directors will need to provide signed notices of resignation, and the new directors will need to sign letters of consent to act.

Shareholders' rights

If the company has a shareholders' agreement and a constitution, you should review these documents to ensure that the sale complies with all relevant requirements.

If a shareholders' agreement exists, it will usually provide shareholders of the company with 'pre-emptive rights' to purchase the shares of a selling shareholder. This means that current shareholders have the first right to buy shares being sold by the seller. If they have this right, then all of the continuing shareholders will need to sign a waiver of their pre-emptive rights if the shares are being sold to a third party.

Notifying ASIC

Once a share sale transaction has completed, the company must notify ASIC within 28 days of the changes to shareholders, directors, and any address changes. You can do this by completing a Form 484 available on the ASIC website.

For personalised advice on buying a business via a share purchase, contact Hardies Lawyers today. Explore our blog for more insights into business succession planning and stay informed about the latest strategies to future-proof your business.

Disclaimer : This article is for educational purposes only and does not constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.

Getting your business ready for sale

Fri, 01 Aug 2025 04:44:03 GMT

The reasons a business owner might decide to sell their business are many and varied. Sometimes the decision is driven by an expression of interest or the ripeness of the market, while other times the sale may be forced on a business owner due to circumstances outside their control, such as a dispute between business partners.

To get the most value for your business, prior to having lawyers draw up any contracts, it's important to conduct due diligence on your business to ensure it's ready for sale.

Here are our top 6 tips for getting your business 'sale ready'.

Review

Reviewing what you currently have in place, and by extension what you can actually sell, is critical. This will often form part of a buyer's due diligence.

Prior to selling your business, it's important to consider:

what the key contracts of the business are, and whether they are in writing;
whether leasing arrangements exist over any of the business assets;
whether your employment contracts are in writing, and whether they contain provisions that protect your intellectual property;
whether there are any instances of current or threatened legal action;
how current your licences and any relevant permits are;
whether all statutory employee entitlements are accurately reflected in your books;
what intellectual property is owned by the business, and whether it's registered or unregistered; and
whether your key contracts are assignable, and in turn what is required to effect the assignment of those contracts.

PPSR

Creditors often register security interests on the Personal Property Securities Register ( PPSR ) without advising you or having any requirement to serve you with a financing statement. This can occur where you have waived compliance with this requirement. This can cause registrations to be made against your business which are no longer current or may be incorrect.

Therefore, it's important to conduct a PPSR search on your business and review which registrations are either no longer current or are incorrect. You should also consider issuing amendment demands for the effective discharge of any registrations that should no longer be registered on the PPSR or should not have been registered in the first place.

If your financier has a security interest over all your business assets, you should consider what is required to remove that security interest.

Business premises

Do you currently own your business premises or occupy them under a lease or licence? If your premises are leased or licensed, consent from the landlord will generally be required for an assignment of the lease or licence. This can take time and should be factored into the sale process.

If you are not transferring the right to occupy the premises as part of the business sale, you may need to consider what 'make good' obligations you need to take care of before you vacate the premises. If so, what is the likely cost of complying with these obligations?

Assets

You should identify which assets are used in the conduct of the business and those that are not. The condition and value of the assets being sold is important. You should consider whether these assets will be sold unencumbered and, if so, what it will cost to remove the encumbrances.

You will also need to consider how you will treat any partly completed work ie, work-in-progress. Will you finish this work, or will it be taken over by the buyer? Similarly, how will you deal with any deposits that you've already received for partly completed work?

Employees

One of the most important things to consider when selling a business is whether the sale will involve the transfer of existing employees. If so, you'll need to provide the buyer with a schedule of their names, positions, and accrued employee entitlements.

Employee entitlements prior to the completion of the sale will also be your responsibility. There may be an adjustment for any accrued entitlements in favour of the buyer at completion of the sale.

You should ensure that any non-salary benefits given to employees are documented. Buyers are entitled to know what each transferring employee expects to receive as part of their remuneration package.

You should also identify any 'key employees' whose employment by the buyer is likely to be a condition precedent to the sale. Ask yourself whether you’re likely to be vulnerable to a 'key employee' deciding whether or not they will transfer their employment to the buyer. If so, the situation with that employee will need to be handled delicately.

Key advisers

Having key advisers in your corner is crucial. Consult your lawyer and accountant on whether the sale of your business as a 'going concern' for GST purposes is the most effective way to proceed, or whether the sale should be effected another way, for example, by the sale of shares in your company.

Remember to consider any tax implications that might arise from the sale of your business and have a good understanding of how to determine a purchase price that fully reflects the value of what you are selling.

Finally, before entering into negotiations with a prospective buyer, you should ask them to sign a confidentiality agreement (otherwise known as a non-disclosure agreement or 'NDA') to ensure they don't use your business information other than for considering whether to enter into the sale transaction.

For personalised advice on selling your business, contact Hardies Lawyers today. Explore our blog for more insights into business succession planning and stay informed about the latest strategies to future-proof your business.

Disclaimer : This article is for educational purposes only and does not constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.

Key differences between a business sale and a share sale

Tue, 01 Jul 2025 09:10:10 GMT

Often the concept of buying or selling a private company is confused with buying or selling a business. However, there are fundamental differences between them.

The sale of a company occurs when all of the shares in the company are acquired, whereas the sale of a business occurs when the assets of the business are acquired.

In this post, we take a look at the key differences between the two concepts, together with the risks involved with each.

What is a share sale?

The law recognises a company as a separate legal entity, which is independent from its shareholders. A share sale transaction involves taking over the company in its entirety, including all risks, liabilities, obligations, and claims in connection with that company.

A share sale transaction usually involves an exhaustive due diligence process, with completion of the share sale typically being conditional upon the buyer being satisfied with its due diligence. Accordingly, sellers are typically required to provide extensive warranties and indemnities with respect to the share sale.

Usually, a share sale transaction is documented in a share sale agreement and requires a transfer of shares from the seller to the buyer. An experienced commercial lawyer can assist with drafting the share sale agreement, along with any other documents associated with the transaction. In most cases, shareholders and directors of the company change over to the buyer and its nominees. As such, the seller and the buyer have an obligation to notify the relevant regulatory body, the Australian Securities & Investments Commission, regarding the changes to the company's ownership structure as well as general compliance with the Corporations Act 2001 (Cth).

Key factors to consider in a share sale transaction

When buying shares in a company, the buyer should be aware of the risks associated with acquiring the company as a whole. These risks are generally greater than the risks associated with buying a business, as owning the company includes owning the liabilities of that company.

Therefore, it is usual practice for the buyer to carry out extensive due diligence, including requiring disclosure of all past activities of the company, its shareholders and directors, and also requiring that the seller provide warranties and indemnities that are more robust than those typically required in a business sale transaction. This is to protect the buyer from unknown liabilities and risks of the company following completion of the transaction.

There are also tax implications that need to be considered in a share sale transaction. It is therefore important to engage an experienced commercial lawyer and other professional advisers early in the process to advise you on the transaction.

What is a business sale?

A business sale transaction usually involves buying the assets of the business, including stock, equipment, intellectual property, and goodwill.

Generally, in a business sale transaction, the buyer does not take on the liabilities of the business or the liabilities of the seller associated with the business. Usually, a business sale transaction is documented in a sale of business agreement.

Key factors to consider in a business sale transaction

Intellectual property such as trademarks are often valuable assets for most businesses. Therefore, it is not uncommon for the buyer to insist on acquiring all of the assets of the business, particularly the intellectual property, business name, and client lists, following completion of the business sale.

Business sale transactions sometimes require the consent of third party contractors before the business can be sold. This could include, for example, the assignment of sub-contractor agreements and exclusive distribution agreements. Innately, the nature of the business determines the type of third party contracts that may need to be assigned.

In a business sale transaction, if the buyer wishes to retain existing employees of the business following completion, the seller will need to terminate their employment so that the buyer can re-employ them on terms that are usually the same as, or substantially similar to, the terms of their existing employment agreements.

Similarly, if the business is operating from leased premises, the sale of business agreement will usually include a condition that the landlord either assigns the existing lease to the buyer or enters into a new lease directly with the buyer.

Conclusion

Whether you're looking to buy or sell a business or the shares in a company, it's important to get legal advice at the outset to minimise risk and ensure the transaction runs smoothly.

For personalised advice on business sales and share sales, contact Hardies Lawyers today. Explore our blog for more insights into business succession planning and stay informed about the latest strategies to future-proof your business.

Disclaimer : This article is for educational purposes only and does not constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.

Do I need a power of attorney for my company?

phardie@hardieslawyers.com (Paul Hardie) — Sun, 01 Jun 2025 09:01:17 GMT

A company power of attorney is an important legal document made by a company that authorises an individual to act and sign certain documents on its behalf.

This individual is called an 'attorney'. A company power of attorney can authorise the attorney to execute any documents referred to in the power of attorney, including specific types of documents or any documents determined by the company.

According to law, a company has the capacity of a legal person and acts through its directors. This means, for example, that a company can enter contracts in the same way that an individual can. Directors sign documents and make decisions on behalf of the company. However, if the directors cannot act on behalf of the company, the company cannot operate effectively.

A company power of attorney involves the company’s directors appointing a person to act as the company's attorney. That attorney will then have the power to do the things that the company power of attorney authorises them to do. This may include executing documents (for example, signing contracts) and making company decisions.

There are several important questions to consider when granting a company power of attorney, including:

Do you need a company power of attorney?
Can your company lawfully appoint an attorney?
Who should you appoint as the company’s attorney?

Do you need a company power of attorney?

The most common reason for a company to grant a power of attorney is if one or more of the directors, who would usually sign documents on behalf of the company, is unavailable. For example, if the director is away on holiday or business and is difficult to contact, the company may not be able to execute documents which rely on the director's signature.

A company power of attorney may be particularly important in a small or start-up company. For example, in companies with only one director, if that director is out of contact or loses the capacity to sign business documents, the business will come to a standstill if no one else is authorised to sign off on cheques or key documents affecting cash flow. For companies with 2 directors, corporations law requires 2 directors or a director and a secretary of the company to execute documents. This means if one director loses capacity or is unavailable, the company may not be able to sign documents or carry on business. A company power of attorney can solve this problem.

Can your company lawfully appoint an attorney?

Corporations law grants companies the legal capacity and powers of an individual, both in Australia and overseas. A company is therefore authorised to appoint an attorney or an agent on terms determined by the company. The attorney or agent can be either another company or an individual.

Who should you appoint as the company's attorney?

You should take care in choosing the right person to appoint as your company's attorney. You will also need to determine the period of the attorney's appointment, and any limits on their authority. Delegating authority to a person who does not otherwise have that authority should always be well documented in a company power of attorney. In addition, you should always clearly communicate to the attorney the limits of their power so they understand what they can and cannot do. This will help minimise the risk of the attorney acting outside their authority.

Conclusion

A company power of attorney is a legal document where the company appoints another person (the attorney) to act on its behalf. It's important because it gives another person the power to carry out tasks for the company in situations where the company itself (by way of its directors) is unable to act. Therefore, appointing an attorney for your company is a serious undertaking. You should carefully consider who you wish to appoint as an attorney and make sure you document the appointment properly.

For personalised advice on company powers of attorney, contact Hardies Lawyers today. Explore our blog for more insights into business succession planning and stay informed about the latest strategies to future-proof your business.

Disclaimer : This article is for educational purposes only and does not constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.

Deciding which business structure to use

Thu, 01 May 2025 08:52:58 GMT

Starting a new business and not sure which business structure to use? Already have a business but looking to take on a partner or investor?

It's always important to consider the pros and cons of the different business structures in Australia to make sure the structure you choose is the right one for the business and its needs going forward.

In Australia, there are 4 main business structures: sole trader, partnership, company, and trust.

Sole trader

A person can carry on business on his or her own behalf as a sole trader. A sole trader can trade under his or her own name or a registered business name. The income earned as a sole trader is taxed at the same rate as an individual taxpayer. This is the simplest form of business structure, with lower establishment costs and minimal legal and compliance requirements.

The main disadvantage of this type of business structure is that a sole trader is personally liable for all obligations incurred in the course of the business.

Partnership

Two or more individuals or entities can carry on business in partnership where the income from the business is received jointly. Partnerships are relatively inexpensive to form and operate. Most partnerships are established by a partnership agreement which sets out the rights and obligations of the partners. A partnership itself is not taxable, rather each partner pays tax on their share of the net income of the partnership.

The main disadvantage of this type of business structure is that partners are jointly and severally liable for the obligations of the partnership.

Company

A company is a separate legal entity capable of holding assets in its own right. A company is owned by shareholders, and the directors manage the day-to-day operations of the company. The shareholders are entitled to company profits in the form of dividends. Shareholders can limit their personal liability and are generally not liable for the company's debts. Instead, the financial liability of the company is limited to its assets.

Companies are governed by the Corporations Act 2001 (Cth) which imposes various duties and obligations on company directors. Primarily, directors have a duty to act in the best interests of the company. Incorporation and ongoing administrative and compliance costs are generally higher than other business structures.

Trust

Under a trust structure, a trustee holds the property or assets of the trust and carries on the business on behalf of the beneficiaries of the trust. A trustee can be an individual or a company. A formal trust deed is required to set up a trust and there are annual reporting and compliance obligations which the trustee must comply with. As such, it can be expensive and complicated to set up and administer a trust.

The advantages of a trust include flexibility for income distribution which can be streamed to low-income tax beneficiaries to take advantage of lower marginal tax rates. Trust assets can also be protected under a properly drafted trust deed.

Conclusion

When deciding which business structure to use, consideration should be given to factors such as how many people will be involved in the business, what the business will do, how much income is likely to be earned from the business, and the future sale of the business.

For personalised advice on business structures, contact Hardies Lawyers today. Explore our blog for more insights into business succession planning and stay informed about the latest strategies to future-proof your business.

Disclaimer : This article is for educational purposes only and does not constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.