FAQ

Find answers to the most

Frequently Asked Questions

When you consider availing legal services for your start up or business, it is normal to have a lot of questions cross your mind. We have tried to answer the most frequently asked questions by start up founders and business owners like yourself.

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  • How do your legal bots work?

    It's really easy. First, select the document you want, checkout through our payment platform, answer the interactive questions asked by our legal bots, and voila—your fully customised document is automatically generated and ready for download. Our lawyers will then check your document and let you know if there are any issues.

  • How does your 7-day money back guarantee work?

    We want you to be 100% happy with your purchase. If there are any issues, please contact us and we will do our best to resolve the issue. If you are still not satisfied with your purchase, we will provide a full refund if you ask within seven days of your purchase.

  • What is the difference between a company constitutions and a shareholders agreement?

    A company constitution is (most of the time) a standard document that comes with a newly incorporated company covering topics such as procedures for directors' meetings, members' meetings, issuing new shares and transferring existing shares.

    A shareholders' agreement is a more detailed document, usually aimed providing majority shareholders' additional powers they would not otherwise have under law, or conversely, to provide minority shareholders' with additional protections they would not otherwise have.

    While a custom-made constitution can cover similar topics to a shareholders' agreement, it is important to remember that a company constitution can be replaced on a 75% vote, where a shareholders' agreement can only be replaced on agreement of all parties to the shareholders' agreement. A shareholders' agreement is therefore more vital to protect minority shareholders.

  • What are some common clauses in shareholders' agreements?

    Shareholders' agreements usually cover:

    1. which shareholders will have the right to appoint a representative director
    2. weight of votes (whether each representative director will have one equal vote or whether their vote will be based on the percentage of the shares held by their appointing shareholder)
    3. drag along rights (the right of a majority shareholder to force minority shareholders to join in selling their shares to a third party)
    4. tag along rights (the right of minority shareholders to elect to join a sale where a majority shareholder is selling its shares to a third party)
    5. buy-out mechanisms (such as "Texas shoot-out clauses" or "Russian roulette clauses")
    6. protection of confidential information and intellectual property
    7. non-compete and non-solicitation clauses
  • What is a buy-sell deed?

    A buy–sell deed deals with the buyout of a shareholder that suffers a "triggering event" (usually death, total and permanent disability or trauma).

    Usually a buy–sell deed will be backed by an insurance policy, whereby the affected shareholder receives a payout in exchange for transferring its shares to the remaining shareholders or the company.

  • What is a trade mark?

    A trade mark is a trader's badge of origin. Trade marks are intended to protect a trader's goodwill in a product or name while protecting the public from counterfeit goods or services.

    A trade mark may be a letter, word, name, signature, number, logo, picture, brand, aspect of packaging, shape, colour, sound or scent, or any combination of those. 

    Trade marks are registered in relation to certain classes of goods and/or services. Other traders are therefore free to use or register the same trade mark for unrelated goods and/or services.

  • When should I register a trade mark?

    You should register your trade mark as soon as possible, as the priority date for a trade mark is the date it is filed. Having the earliest priority date possible is important in case someone else files a similar trade mark.

  • What protection does a trade mark give me?

    The owner of a registered trade mark has the exclusive rights to use the trade mark and authorise other persons to use the trade mark in relation to the goods and/or services in respect of which the trade mark is registered. This means you can stop someone else using a trade mark in relation to goods or services that are the same or similar to the goods or services covered by your registered trade mark.

    Registered trade marks can also be sold, transferred or licensed to another person, and even encumbered. 

    A registered trade mark lasts 10 years, and can be continually renewed for successive 10 year periods by paying a renewal fee. 

  • What should I do if someone infringes my trade mark?

    A person infringes a registered trade mark if the person uses, as a trade mark, a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.

    Most trade mark disputes can usually be resolved quickly and commercially. Sometimes all it takes is to point out to the infringer that you are the registered owner of a particular trade mark. When the stakes are high, however, it may be necessary to commence court proceedings.

  • What should I do if someone accuses me of trade mark infringement?

    You should get legal advice as soon as possible. The accusation will either be legitimate, baseless or arguable, but in any case, you should have a lawyer respond to protect your position.

  • How can corporate structuring protect my trade mark from litigation risk?

    Corporate structuring is often used to isolate trade marks from risks your trading entity is exposed to.

    If such corporate structuring is not utilised properly, it can actually invalidate your trade mark.

    We have the methods to bring the nuances of corporate structuring and trade mark law together to provide your trade mark portfolio with the ultimate protection.

  • What is a SAFE Note?

    A simple agreement for future equity (SAFE) is an equity financing instrument that was developed by Y Combinator in the United States. The SAFE instrument was designed to accelerate the seed funding round for startups by providing a standard, short document (usually five pages) to simplify negotiations.

  • What is a convertible notes?

    Convertible notes are debt instruments (with an option to convert into shares). If the investor does not choose to convert their convertible notes into shares, then the company will be obliged to repay the face value of the convertible note to the investor. Convertible notes usually also require the company to pay the investor interest payments (commonly called "coupons").

  • What is startup structuring?

    Startup structuring involves selecting the most suitable legal entities and ownership structure for your startup. Choosing the most suitable is important to ensure your startup is ready to seize capital raising and exit opportunities.

    Examples include companies, unit trusts, discretionary trusts, partnerships, and joint ventures.

    The most suitable legal entity will depend on the type of business and your goals for the future.

    Corporate structuring can also be used to restructure an existing corporate structure.

  • Why is startup structuring important?

    Startup structuring is important because having the wrong corporate structure can significantly delay a capital raise or exit event (or even cause the deal to fall over). Further, the wrong corporate structure can also invalidate trade mark registrations and cause unnecessary tax complications.

  • Can you implement the best possible corporate structure for us?

    Yes, we have the methods to utilise tax concessions to restructure your existing corporate structure into one that will streamline capital raising and exit events, protect your trade mark portfolio and prevent adverse tax consequences.

  • How do mergers work?

    A merger involves two companies combining. Usually, the smaller company (called the “target”) will sell its business to the larger company (the “acquirer”), and the shareholders in the target will get shares in the acquirer, instead of cash.

  • What is the difference between a trade sale and a share sale?

    A share sale is where the shareholders of a company sell their shares. A share sale can either be a complete sell out or a partial selldown.

    A trade sale is where the company sells its business assets. The underlying ownership of the selling entity does not change. Only ownership of the assets being sold changes.

  • Our end goal is to achieve an exit event. What can we do now to prepare?

    It is important to ensure that you get your corporate structure cleaned up before attempting to find an acquirer for your startup. Having an inadequate corporate structure could cause your deal to be delayed (until you restructure), fall over (due to delays) or cause you a poor tax outcome if the deal proceeds without restructuring. You should also go through a pre-sale process with an M&A adviser to resolve any issues that may negatively affect the sale price.

  • I am interested in buying a business. What other transaction costs should I be aware of?

    The two transaction costs to keep in mind are GST and transfer duty.

    GST will only be applicable to an asset sale if you buy business assets from the seller as stand-alone, and not all of the assets required to run the business. GST is not applicable to share transactions.

    Since 1 July 2016, transfer duty does not apply to goodwill, intellectual property or plant and equipment in New South Wales. Transfer duty will apply to plant and equipment, however, if you are taking over the seller's lease or buying an interest in land. In Queensland, transfer duty will apply to the entire purchase price.

    If GST is applicable, then transfer duty will be calculated on the GST-inclusive amount.

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