Understanding things and mistakes to avoid when a new company sets up legal agreements in Australia

Understanding things and mistakes to avoid when a new company sets up legal agreements in Australia

For a new company or a legal documents we need to make sure that we have agreed upon the basic and all types of complex terms regarding hire agreement template and partnership agreement or the baseline of company constitution, though we may not be experts in this area we should at least understand the basic terms which we need to make sure.

A: What is the number of shareholders and others?

The number of shareholders and others need to be mentioned in the articles of association or constitution. If it is a private company or public company then the articles should mention at least two shareholders and other (e.g. directors, employees, contractors, etc.) as less as possible as it will save you from any legal issues such as breach of articles regulation and central restriction.

B: Who can vote or nominate?

Dispute resolution provisions, including those regarding voting rights and nomination rights, need to be stated in the articles.

C: Number of directors?

The number of directors needs to be mentioned in the articles of association or constitution, if it is a private company or public company then the articles should mention at least two directors as little as possible as it will save you from any legal issues such as breach of articles regulation such as central restriction.

D: Who can be director/s?

Dispute resolution provisions including resident director australia and those regarding directors and other (e.g., employees, contractors) need to be stated in the articles. Dispute resolution provisions regarding the right to nominate and elect directors and other persons should also be included.

The common mistakes in compiling things could be :

1: Not having a constitution or if it does not meet the legal requirements.

2: For private companies, there must be at least 2 directors and each of them can nominate him/herself for election as a director. A sole director who is also the secretary is permitted to do this. However, there may be difficulty in proving that "he" (the single director and secretary) was duly elected if he is challenged by the company or its creditors after his appointment. Accordingly, we recommend that you always have at least two directors and declare that they will both resign if one becomes incapacitated; and ensure that more than two shareholders will also resign in such circumstances (to avoid becoming insolvent).

So, it is important to have business sale agreement, shareholder agreement template and consulting agreement that has been agreed by the members and has no controversial issues.

Choose your business sales agreement and non disclosure agreement or employment contract template carefully. You may be thinking that it will only take a couple of minutes to write it up but in fact, this may turn out to be extremely tedious and time-consuming for you when people are relocating from overseas, expecting everything to be signed in triplicate. This is not what most people want because most of the time, the wrong thing is recorded or no agreement is executed which leaves them with something that they do not need.

For example, if your relocation package has been agreed upon by the members of your company in advance then have all of these documents attached to it before you send them off so that everyone knows what they are buying into when they arrive in Australia.


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