Business & Commercial Law
Buying, building or selling a business? We provide complete solutions.
Business Law relates to the entire lifecycle from starting, running, growing to selling a business.
Turner Hopkins has significant experience ensuring our clients receive sound commercial and practical advice to assist them in all legal matters relating to their business.
We can assist our clients in drafting the initial Agreement for Sale and Purchase incorporating the various conditions such as due diligence, finance and resource consent, which may be applicable to the transaction.
It is critical to choose the right business structure for your commercial requirements, as the structure will impact on many aspects such as start up costs, taxation matters, applicable tax rates and your legal obligations. Limited Liability Companies are by far the most common vehicle operating in New Zealand for small to medium enterprises. They are cost effective to incorporate and provide a significant degree of limitation of liability in respect of business creditors.
Limited Liability Companies have a default set of governance rules that are embodied in the Companies Act 1993.
Commercially sound legal and accounting advice is vital when the decision is made to explore the concept of a business purchase. While the basic principles of purchasing a business are similar regardless of the type of business or the size of the transaction, an in-depth analysis of the fine print is essential to ensure that you receive what you thought you had bargained for. Post settlement disputes are messy and stressful when you are trying to get to grips with running the newly acquired business.
It has become more prevalent in recent times to carefully assess business risks and from a borrower's perspective limit the risk to the immediate assets.
Proprietors are no longer willing to simply offer guarantees with supporting collateral securities over houses, investment properties and other similar assets. It has become more commonplace to provide a limitation of collateral securities to a specified sum that is only necessary to fulfil the lender's funding criteria.
We also advise clients that it is important, where a family trust or other entity is called upon, to offer security securing a trading entities funding. The family trust should receive security from the company as consideration for the securities it is offering.
When embarking on any commercial enterprise it is important for the parties to turn their mind to the potential for disputes in the future and agree upon a fair and cost effective method for dealing with these disputes. Mediation through a formal and qualified mediator has become significantly more popular over the last ten years. It offers the advantages of speed, privacy and cost effectiveness.
There are other options including arbitration and litigation. We have at Turner Hopkins, experience in mediation, arbitration and formal litigation should you be required to embark on any of these processes.
This is an issue which must be considered carefully from both the vendor and purchaser's perspective. We believe it is appropriate to form a team of professionals to assist a vendor or purchaser throughout the due diligence period of a transaction to ensure comprehensive advice is obtained on all aspects of a transaction; including assets values, trading history, resource management issues, leasing issues, marketing and competition.
Turner Hopkins' depth of knowledge of the IRD's policies and processes will assist you to successfully negotiate with the IRD should an issue arise. The team at Turner Hopkins will work alongside you to negotiate debt settlements with the IRD.
Turner Hopkins has in depth knowledge around financial structures, funding and finance. This is a complex area that we are only too happy to assist. There are both benefits, and, in some case disadvantages depending on the structure used which should be understood from the outset.Book a Consultation →
An Agreement for Sale and Purchase is a binding contract between the purchaser and the vendor which contains the terms and conditions agreed on by the two parties in respect of the transaction. The form of an agreement for sale and purchase normally adopted by solicitors practising in the Auckland District is the Agreement for Sale and Purchase of a Business Fourth Edition 2008(2). A copy of this document is available to sight by clicking here.
The document contains 90% generic clauses which are generally accepted by the parties involved in a business transaction and provides for the insertion of the specific terms relating to the transaction, for example:
Each transaction will invariably involve consideration and agreement as to how certain issues are to be treated, e.g. finance conditions, due diligence conditions, treatment of existing staff, compliance issues, leasing issues a lawyer can assist in tailoring the "special conditions" to the particular transaction.
There are a number of different business structures, which are available to complete the purchase of the business. Often a prospective purchaser will initially enter into the agreement in their own name and nominate the business structure to finally complete the purchase prior to settlement. When considering the most appropriate business structure, normally advice is taken from both the purchaser's accountant and lawyer.
The most common type of business structures are:
As a sole trader you will operate the business in your own name. Generally, sole trading is appropriate for smaller businesses operated by a single individual who may employ a limited number of employees to assist in the running of the business.
Where two or more individuals (or entities) jointly pool their assets and share the liabilities in the operation of a business. It is common for partners to enter into a partnership agreement defining their rights and responsibilities. If there is no written partnership agreement, the Partnership Act will govern their relationship. Like sole traders, each partner is responsible for all partnership obligations.
This is the most popular entity by virtue of which small to medium sized businesses are operated in New Zealand. The company is a separate legal entity from its shareholders and directors and in most cases all liabilities incurred by the company remain with the company and cannot be levied against the shareholders and directors.
There are other entities which are used such as joint ventures, trading trusts and public companies.
It is critical to choose the right business structure for your commercial requirements as the structure will impact on:
This has been dealt with to some extent in our Leasing page. However, we offer comments below in relation to business leases.
Please click here to view the form of Constitution and default Rules contained in the Companies Act.
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“John is very easy to talk to, he never makes you feel dumb, and never makes you feel like you are wasting his time for asking questions. He explains everything very clearly, every time. John's support staff are also very efficient and so easy to deal with. No detail is missed when dealing with them. My husband and I are fans of them all :)”~ Jess