The Business Innovation and Investment visa (subclass 188A visa) is a provisional visa allowing applicants intending to own or manage a business in Australia to stay for up to four years and three months. It is also a viable pathway to permanent residency. This article will provide a brief overview of the minimum requirements in each state and territory in Australia to lodge an application for the subclass 188A visa.
Eligibility
Before applying for the subclass 188A visa, you must first determine whether you are eligible to lodge an application. You will need to conduct an initial eligibility assessment to do this. To determine your eligibility, you will need to see if you satisfy the requirements and criteria for the visa (discussed below).
Once you determine your eligibility, you will then need to lodge an Expression of Interest (EOI) with the Department of Home Affairs (DOHA). In your EOI, you have the choice to be nominated by a specific state or territory or choose to be available for nomination by any state or territory. You do not need to provide supporting documents at this stage. However, you must be able to provide evidence that the information supplied in the EOI is correct when you are invited to apply for the visa.
If your EOI is successful and a state or territory nominates you, you will then be invited to lodge an application for this visa.
Requirements Across Australia
At the time that you are invited to apply for the subclass 188A visa, you must:

be under 55 years of age (unless you can prove that the business you propose has an exceptional economic benefit to the nominating state or territory);
genuinely wish to own and maintain a major management role in a business in Australia;
score at least 65 points on the innovation points test, which considers factors such as your:

age;
English competency;
qualifications;
experience;
turnover;
assets; and

have had no involvement in unacceptable business or investment activities. This includes both you and your spouse or de-facto partner.

Key Differences Between States and Territories
When you are invited to apply for the subclass 188A visa, you must also have had a successful business career. The criteria determining business success vary between states and territories, and between regions.
Business Experience and Turnover
If you intend to migrate to Sydney, you must have had a qualifying ownership interest in up to two main businesses for at least two of the four fiscal years immediately before you make your application. These businesses must have had an annual turnover of at least AU$1 million.
The requirement in the rest of Australia is that you have had an annual turnover of at least $500,000. This includes:

regional NSW;
Queensland;
Western Australia;
Victoria;
South Australia;
Tasmania;
the ACT; and
the Northern Territory.

Net Assets, Investment and Proposed Business Activity
If your proposed business will be in Sydney, you (and your spouse, if applicable) must have total net business and personal assets of at least AU$1.3 million. You must be able to legally transfer these assets to Australia within two years after the granting of your visa. Your business commitment must also include at least AU$500,000 in business investment.
In regional NSW, the personal and business assets threshold is lower at AU$800,000, and the business investment threshold is AU$300,000.
In Queensland and Tasmania, you must demonstrate assets of at least AU$800,000 (including a minimum of AU$200,000 for investment), as well as a commitment to living in either state.
Victoria excludes certain industries from eligible proposed business activities, such as:

small scale property development;
freight forwarding; and
scrap metal export.

If you propose to engage in export activity, you must demonstrate that your business will make a direct contribution to the Victorian economy.
In South Australia and the ACT, if you are under 55 years of age, you must provide evidence that you have met either one (SA) or two (ACT) of the following criteria:

employed two full-time equivalent employees;
provided a minimum capital investment of AU$200,000; or
injected at least AU$600,000 of net personal and/or business assets.

These requirements change if you are over 55 years of age, or if you intend to invest in country or regional South Australia.
In Western Australia, you and your partner combined must have total net business and personal assets of at least $AUD900,000. These must be held in Western Australia within two years after the granting of your visa.
Key Takeaways
A Business Innovation Visa (subclass 188A) is a provisional visa for applicants who intend to own or manage a business in Australia. Before you submit an EOI for the visa, ensure that you meet eligibility requirements for nomination for the visa. Requirements may vary between states and territories and include factors such as:

age;
language;
business conduct;
net personal and business assets; and
business investment and turnover.

If you have questions about your subclass 188A visa application, get in touch with LegalVision’s immigration lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post How Do I Apply for a Subclass 188A Visa (Business Innovation Stream)? appeared first on LegalVision.

The days of cigarette smoke wafting through the air of the average office are long gone. In Australia, employees are not expressly entitled to have a smoking break under Australian law. The right to smoke is not protected unless the employee’s smoking habit can be classified as a substance addiction. This means an employer has the right to set reasonable boundaries on when and where an employee may take a smoking break, subject to any binding agreements relating to an employee’s employment.
This article will consider:

what breaks you must give your employee under the law; and
whether you can dismiss an employee for taking smoking breaks while on the job.

What Breaks Am I Obliged to Give an Employee?
Your obligation as an employer to offer an employee rest or smoking breaks may arise on one of several grounds.
1. Workplace Health and Safety Laws
As an employer, you have an obligation to ensure a safe and healthy workplace. “Safe and healthy” encompasses more than a physically safe environment and extends to the emotional and psychological wellbeing of employees. You may need to offer your employees reasonable breaks to fulfil this obligation.
2. An Employee’s Employment or Enterprise Agreement
An employee’s employment agreement or enterprise agreement may also set out your obligations as an employer to offer your employees rest or smoking breaks.
3. Modern Employment Awards
Modern employment awards may also prescribe smoking breaks for particular industries or occupations. These are usually separate to rest breaks.

Modern awards set out employees’ and employers’ rights and obligations, in addition to the minimum requirements set out in the National Employment Standards.

Once you have determined the nature of your existing obligations under these laws and agreements, you can set reasonable boundaries on when and where a smoking break may be taken. This may form a part of your workplace’s employment policy. However, any policy you set on smoking breaks cannot curtail your employees’ rights under an award or agreement.
Can I Dismiss an Employee for Breaching My Smoking Policy?
It is possible to lawfully dismiss an employee on the basis that they have breached your workplace’s smoking policy. However, the lawfulness of such a dismissal depends on the facts and circumstances of the particular case. In particular, it depends upon evidence of whether the employee’s smoking habits can be classified as a substance addiction. In the case the employee has a substance addiction, this can be classified as a disability.
If an employee’s substance addiction is classified as a disability, an employee may be successful in an unfair dismissal claim for any dismissal based on that disability. It is therefore important to consider, before dismissing an employee for breaching your workplace’s smoking policy, whether their smoking can be considered a substance addiction.
Key Takeaways
Your obligation as an employer to offer your employees smoking or rest breaks may arise under:

workplace health and safety laws;
an employee’s employment or enterprise agreements; or
the relevant modern employment award.

However, a separate smoking break is not a specific entitlement at law. It is up to employers to set reasonable boundaries on smoking breaks in the workplace and place them into their company policies. It is possible to lawfully dismiss an employee for breaching a company’s smoking policy. However, if an employee’s smoking habits can be classified as a disability, they may be successful in an unfair dismissal claim against their dismissal. The court or tribunal will decide these questions against the particular facts and circumstances of the case. If you have any questions about smoking policies in your workplace, get in touch with LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post I’m an Employer. Is My Employee Entitled to a Smoking Break? appeared first on LegalVision.

Designing a legal product is no simple feat. Legal products are particularly complicated as they are laden with strict financial and process requirements. However, designing a legal product that simplifies legal advice for both your clients and lawyers can be extremely beneficial for your business.  In this article, we will explore how to develop a successful legal product through a behind-the-scenes case study of a new product developed by our firm.
Let’s Talk About Paper Clips
Before diving into the details of the case study, it is useful to analyze what makes a good product. In doing so, let’s look at one of the most prolific and well-designed products of the twentieth century: the paperclip.
It looks simple, but the paperclip took decades of design and redesign to get to the product we use today. In the mid-1800s, people would bind sheets of paper by piercing them with sewing pins. This was awkward and painful to use and led to a renaissance of pseudo-paperclip inventions throughout the century.
In 1899, the paperclip that we use today was born. This simple, elegant design reflects that its creator had an in-depth knowledge of the:

fundamental purpose of the paperclip; and 
available resources and their constraints. 

What Does This Have to Do With the Law?
Traditional law firms are full of the 1860’s paperclip equivalent in legal products. Understanding the fundamental purpose of a particular legal service and efficiently using resources is key to creating an exceptional client experience.

Take a simple lease review and advice document. When a first-time business owner reaches out to a law firm with a 25-page lease, lawyers review the document and write up advice. This new document itself might be 18 pages long. 
For that client, it means that they have forked up a tidy sum of cash and in exchange must now read not only the 25-page lease but also an 18-page document.

Understanding what people really want is a question that drives modern-day business innovation. It is a question that is deeply embedded within the now commonplace net promoter score (NPS) metric. This metric has grown explosively through the business world since Fred Reichheld first introduced it within a 2003 Harvard Business Review article. 
A Case Study
Given the term of such contracts and their potential consequences, law firms are often asked to review commercial leases and advise on their content and any red flags. The drafting of clauses is often similar from one lease to another, which makes them well suited to experimentation. 

When a small business owner decides to set up a kebab store at Westfield, they’re landed with a lease so dense, it looks like a foreign language.
Lawyers have therefore taken the place of translators for those without legal experience.

Ultimately, lease reviews (like a lot of other legal work) need to serve more than just a legal function; they must also be educational. This is because the primary purpose of a review is for the reviewing lawyer to provide advice to the client. If this client does not understand the advice, the exercise will not be worthwhile. 
What Does Legal Product Redesign Look Like?
With the above goals clear in our minds, our LegalVision Review and Advice (R+A) Pilot was born. Our Legal Transformation team designed a new approach to creating R+A documents. At its core, the new approach makes the document easier for a client to understand and more manageable for a lawyer to draft. This is achieved by limiting the advice to the critical issues that are partnered with clear action steps for the client to take. At LegalVision, this took the form of a newly designed output.
This new framework provides a set of annotated examples to guide LV lawyers through their review. The end legal product now includes an educational cover page that describes each key issue and lists the types of action steps. Icons, colour and images are also used to break up the text and convey meaning while maintaining brand continuity.
Within the advice table itself, we laid out the essential components of critical issues, with an additional ‘discussion’ section. This structure helps cater to different levels of sophistication for clients. The action-oriented client can quickly garner the key issues and action steps. However, those who want to dig deeper into the legal analysis can explore the discussion section at their leisure.
How Do We Ensure the New Template Is Used Properly?
A Sprint is a method from the software development world that keeps changes within legal teams agile. This means that you can:

quickly test what does and doesn’t work;
track and implement feedback; 
allow for iterative growth; and 
integrate all stakeholder interests.

LV’s leasing team entered into a series of two to four-week sprints to test the new approach. The project managers tracked how the legal product was evolving in response to the new approach. They also followed how our clients were reacting to the new format.

At the end of each sprint, the team came together to:

share feedback;
reorient; and 
venture out into the world to test a new approach. 

Was it a Success?
Our Clients loved it. They said it looked great and that the Action Steps were useful and easy to understand. 
Furthermore, our lawyers loved it. They said it:

simplified and focused their work; and 
provided a strong foundation to add further value to clients.

LegalVision NewLaw White Paper

An essential read for any lawyer interested in the future of law, this white paper covers a breadth of NewLaw topics including legal tech trends, benefits of legal process design, the future of legal outsourcing, case studies on smart contracts and key developments for NewLaw players.
This report will help lawyers and law firms navigate the NewLaw landscape.

Download Now

What’s the Bigger Picture?
The R+A Pilot was an exercise in Legal Document Design. It is one of many LV products that we have refined through a ‘User Experience’ focused design.

Effective legal document design is a global movement already; Jincom in South Africa and Aureon in Australia are amongst the first to launch visual employment contracts.
Former High Court Chief Justice Robert French supported the movement. He told a conference that “there is no reason in principle why [visual contracts] could not be enforceable in the same way as any other contract”. 

Key Takeaways
Legal design can be a complicated process which questions fundamental assumptions and decades of industry habit. However, it can provide many benefits to your legal team, even with the most straightforward legal products and designs.
You can iterate elegantly designed legal products and services by:

balancing the purpose of a product or services with the available resources;
undertaking sprints; and 
integrating feedback. 

If you are looking to implement legal process design within your in-house legal team, contact LegalVision’s Legal Transformation lawyers on 1300 544 755 or fill out the form on this page. 

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post Case Study: How Do You Design a Legal Product? appeared first on LegalVision.

Intellectual property (IP) proceedings come up often for our favourite stars in the entertainment industry. While you were singing along to James Arthur and Robin Thicke in the car, they were tied up in lengthy copyright infringement proceedings. In most cases, IP protection is on a first-come, first served basis. It is therefore essential that you seek protection for your IP as soon as possible. This article will break down five of the most famous recent IP cases and key lessons we can learn from them.
1. The Script Sue James Arthur for Copyright Infringement
James Arthur’s song ‘Say You Won’t Let Go’ was very popular and reportedly made $20M in revenue for the artist. In 2018, The Script sued Arthur for copyright infringement for the similarities between Arthur’s song and their single ‘The Man Who Can’t Be Moved’. 
The Script argued that both songs shared: 

the same 4/4 meter;
similar tempo;
a four-bar guitar introduction; and
employed similar vocal melodies and harmonic structures.

Arthur responded that “it’s 2017, there are only seven notes in music, and every blues song sounds the same”.

Although we are yet to hear a final decision from the US courts, copyright in music is tricky. Two songs sounding alike is not enough to prove copyright infringement. Instead, the other musician must have copied a substantial amount of the song and you must have proof that they had access to the original music. Even when the Court has proved that copying has taken place, this might not technically be an infringement because the songs lack originality or are too generic. 
Arguably, every artist is inspired by another and subconscious copying takes place. Therefore, it is crucial for every creator to be mindful of where their inspiration comes from. To avoid infringement, you should always assess whether your creation is too similar to other music.
2. Robin Thicke and Pharrell Williams to Pay $5M for ‘Blurred Lines’
In 2018, a court handed down the final judgement for a plagiarism case against Robin Thicke and Pharrell Williams’ song ‘Blurred Lines’. The two artists had to pay a total of nearly $5M because of the similarity between their song and Marvin Gaye’s ‘Got To Give It Up’. 
In his defence, Williams argued that even if he wanted to evoke the mood of Gaye’s song, it was not direct plagiarism. However, Thicke had also previously admitted that they were inspired to write the song after hearing Gaye’s song.
Again, it is difficult to draw the line at where one song might be so similar to another that it constitutes copyright infringement. It was noted in the case that these two songs might have carried the same feeling but differed in: 

melody;
harmony; and
rhythm. 

Therefore, it is essential for artists to be especially careful of creating art that has been inspired by another’s work. 
3. Dr Dre Loses Trademark Battle With Gynaecologist Dr Drai
Famous rapper Dr Dre lost his case in trying to prevent gynaecologist, Draion M Burch, from trade marking the name ‘Dr Drai’. Dr Dre argued that the public would be confused by the similarity of the names. Dr Drai, in his defence, argued that there would be no confusion because Dr Dre is not associated with anything within the medical industry.
The US trade mark office agreed with Dr Drai. They held that it is unlikely the public would get confused between Dr Dre’s music and Dr Drai’s medical services.

This case is a perfect example of how a trade mark is only protected in a selected classes of goods and services. If another business in a completely unrelated industry uses your mark, this will not necessarily be IP infringement.

4. Crocs Lost EU Court Battle Over Patent Claim
Last year, judges in Luxembourg backed the decision of the European Union’s Intellectual Property Office (EUIPO) in 2016 to cancel design protection over the Crocs shoe. The Crocs made its debut in 2002, however, they only sought for protection of their famous shoe design in 2004. In the EU, (and Australia) inventions that you have released to the public cannot receive design protection.
This case serves as a hard reminder for designers to seek protection for your product before you launch it.
However, it is unclear whether ‘soft-launching’ a product to a private group of customers is considered releasing the invention to the public and would, therefore, make design protection unachievable. In this case, you should seek professional legal advice before making your product available in any way.
5. Spotify to Pay Out $112m in Royalties to Songwriters
Following a class action by music publishers and artists against Spotify, Spotify was ordered to pay USD$112m in a settlement agreement. The publishers and artists claimed that Spotify did not pay enough in royalties to musicians.
Nowadays, people often access music through online streaming services like Spotify instead of traditional album records. In response to this shift, artists and music publishers now demand copyright royalties based on the number of online streams.
This case highlights the responsiveness of the legal system towards changes caused by technology. If you are copyright owner, it is crucial that you monitor your rights across online platforms.
Key Takeaways
Famous IP cases highlight the importance of protecting and enforcing your IP rights. In regards to music, you can claim copyright infringement if prove that the other artist has substantially reproduced your work. Furthermore, trade mark protection will not extend in situations where the other trade mark is in a different industry. You should also always seek IP protection over your invention before launching it. If you have any questions about protecting your IP rights or commencing IP cases, contact LegalVision’s IP lawyers on 1300 455 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post 5 Famous IP Cases That We Can Learn From appeared first on LegalVision.

In Australia, there are two main visas that allow skilled workers to live and work in Australia permanently. They are the Skilled Independent Visa (subclass 189) and the Skilled Nominated Visa (subclass 190). Both the subclass 189 and 190 visas are points-tested visas. This means that when you submit your expression of interest (EOI) for the visa, your eligibility for the visa is assessed based on the points you score. These points are based on a range of factors including:

your age;
English language skills;
employment experience; and
educational qualifications.

You will be required to provide evidence supporting your claims when you lodge your visa application. This article will explain the key points criteria for the subclass 189 and 190 visas and provide some tips on how to maximise your score to satisfy the points-test. 
Subclass 189 and 190 Visas
Although the subclass 189 and 190 visas share many similarities, there are a few distinguishing elements. The following table outlines a few of the key similarities and differences between the subclass 189 and 190 visas.

Subclass 189
Subclass 190

This visa allows you to:

stay in Australia permanently;
work and study in Australia;
sponsor eligible relatives for permanent residence;
travel to and from Australia for 5 years; and
become an Australian citizen if eligible.

You must:

be invited to apply by the Department of Home Affairs (DOHA);
have your skills assessed by the relevant assessing authority for your nominated occupation;
be under 45 years of age; and
have competent English.

score at least 70 points for the points-test; and
nominate an occupation on the Medium and Long-term Strategic Skills List (MLTSSL).

score at least 65 points for the points-test;
be nominated by an Australian state or territory government agency; and
nominate an occupation on the Short-term Skilled Occupation List or MLTSSL.

 
Here are a few tips when it comes to maximising your score, and subsequently your eligibility, for these visas.
Tip 1: Ensure You Have Competent English
Both the subclass 189 and 190 visas require you to have at least competent English. However, you will not be able to claim any points for this criterion unless you can demonstrate that you have proficient or superior English. This table outlines the requirements for each English skill level and how many points you can claim at each level. 

You must provide evidence that you have: 
You can claim:

Competent English

citizenship and a valid passport issued by the United Kingdom, United States of America, Canada, New Zealand or the Republic of Ireland; 
an International English Language Testing System (IELTS) score of at least 6 for each test component; 
a Test of English as a Foreign Language Internet-based Test (TOEFL iBT) score of at least 12 for listening, 13 for reading, 21 for writing, and 18 for speaking; 
a Pearson Test of English Academic (PTE Academic) score of at least 50 for each test component; 
an Occupational English Test (OET) score of at least B for each test component; 
a Cambridge C1 Advanced Test (CAE) score of at least 169 for each test component.

0 points

Proficient English

an IELTS score of at least 7 for each test component; 
a TOEFL iBT score of at least 24 for listening, 24 for reading, 27 for writing, and 23 for speaking; 
a PTE Academic score of at least 65 for each test component; 
an OET score of at least B for each test component; or
a CAE score of at least 185 for each test component.

10 points

Superior English

an IELTS score of at least 8 for each test component; 
a TOEFL iBT score of at least 28 for listening, 29 for reading, 30 for writing, and 26 for speaking; 
a PTE Academic score of at least 79 for each test component; 
an OET score of at least A for each test component; or
a CAE score of at least 200 for each test component.

20 points

 

In each case, you must undertake the relevant test within the last three years from the date you are invited to apply (with the exception of the CAE test, which must be dated on or after 1 January 2015).

Tip 2: Ensure You Have Work Experience in Your Nominated Occupation
You may also be able to claim points if you have paid work experience in your nominated occupation (or closely related occupation) inside or outside Australia. This requires you to work in the occupation for at least 20 hours per week and be employed within the last 10 years from the date you are invited to apply. This table outlines how many points you can claim for paid work experience inside and outside Australia.

You have been employed for: 
You can claim:

Inside Australia 

<1 year 0 points 1-3 years 5 points 3-5 years 10 points 5-8 years 15 points >8 years
20 points

Outside Australia

<3 years
0 points

3-5 years
5 points

5-8 years
10 points

>8 years
15 points

 

It is important to note that you can only be awarded a maximum of 20 points for this criterion.

Tip 3: Ensure Your Educational Qualifications Are Recognised
You can also claim points if you have an educational qualification from an Australian Educational Institution (AEI). If you hold an overseas qualification, you can also claim points if your skills assessing authority determines that your qualifications are comparable to the relevant Australian qualification. 

You must provide evidence that you have: 
You can claim:

a diploma or trade qualification from an AEI; 
10 points

a qualification or award recognised by the relevant assessing authority for your nominated skilled occupation as being suitable for that occupation; 
10 points

at least a Bachelor degree from an AEI;
at least a Bachelor qualification from another recognised educational institution; or
15 points

a Doctorate from an AEI or another recognised educational institution.
20 points

Note that you will only be awarded points for your highest qualification.

Additional Points
You can earn additional points if you can demonstrate any of the following criteria:

a Masters degree by research or Doctorate degree from an AEI that included at least two academic years’ study in a relevant field (5 points);
you meet the Australian study requirement (5 points);
completion of a Professional Year in Australia (5 points);
a recognised qualification in a credentialled community language (5 points);
at least 1 degree, diploma or trade qualification from an AEI that satisfies the Australian study requirement obtained while living and studying in regional Australia (5 points);
your spouse or de facto partner is also an applicant and meets the age, English and skill criteria (5 points); or
you were invited to apply for the subclass 190 visa and the nominating agency has not withdrawn their nomination (5 points).

Key Takeaways
Both the subclass 189 and 190 visas are points-tested visas which allow you to live and work in Australian permanently. To maximise your score, you should ensure that at the time you are invited to apply, you have: 

competent English or higher;
employment experience in your nominated occupation; and
recognised educational qualifications. 

You will be required to provide evidence supporting your claims when you lodge your visa application. For a full list of the points criteria, visit the DOHA website. If you have any questions about the subclass 189 or 190 visas, get in touch with LegalVision’s immigration lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post How Can I Make Myself Eligible for the 189 or 190 Visa? appeared first on LegalVision.

If your company is considering appointing a board observer as part of your corporate governance framework, there are few considerations you should take into account. Both the company and the board observer should understand the board observer’s rights, obligations and liabilities. You can achieve this by putting a comprehensive board observer agreement in place. This article will explain:

the role of a board observer;
their key rights and obligations; and
the common clauses usually included in board observer agreements.

Board Observer
It is becoming increasingly common for companies to include board observers as part of their corporate governance framework. A board observer is a person who has the right to attend the board meetings of a company but has no legal vote on any board matters. Investors of a company with significant equity in the company typically select and appoint board observers. Appointing a board observer allows these investors to obtain access to company decisions and have some say in the direction of the company. This is because investors are usually either not entitled to obtain a seat on the board as a director or chooses not to take up such a position.
Why Appoint a Board Observer?
Investors often prefer to appoint a board observer rather than a director because of the responsibilities and liabilities that come with appointing directors. That is, directors owe significant duties to the company and there are severe consequences if these duties are breached. Appointing a board observer allows investors to keep up with and potentially influence company decisions without these duties.
For your company, a board observer can be beneficial as it allows you to obtain an additional viewpoint from your investors without having to give up any control of the board. However, there is a risk that having an extra person at board meetings may change the focus of the board from growing the business to solely focusing on the interests of investors. As a result, you may decide to only provide investors with access to information and financial reports of the company.
Board Observer Agreement
Unlike the role of company directors, corporations law does not govern the role of board observers. As a result, the rights and obligations of a board observer should be set out under contract. Doing so avoids any misunderstanding about their role and provides legal protection for your company.
You can either have a separate board observer agreement or set out the terms of the board observer’s appointment within the company’s shareholders agreement. Depending on what you choose, the contract between the company and the board observer may also include your company’s shareholders or investors as a party.
Common Board Observer Agreement Clauses
The clauses you should include in your board observer agreement will depend on several factors, including the:

type of business;
rights the company wishes to give the board observer;
investors’ expectations; and
plans and goals of the business and investors.

A few of the common clauses included in board observer agreements include provisions about the:

right to appointment;
scope of the role;
procedural matters;
length of the board observer’s term;
remuneration and expenses; and
company protections.

Right to Appointment
A board observer agreement will usually specify who has the right to appoint a board observer (e.g. investors). It usually also confirms that the company has agreed to permit the person appointed as a board observer to take on that role.
Scope of Role
A board observer agreement will also contain clauses confirming the scope of the board observer’s role. In addition, it usually makes it clear that the board has no obligation to act on any of the board observer’s advice or guidance. The agreement will usually provide that a board observer:

has the right to attend and speak at any board meeting;
is unable to vote or exercise any other rights that a company director usually has;
has the right to provide advice and guidance to the board on the company’s strategic and operational matters;
is a consultant only and has no power or influence over the company. This makes it clear that the observer is not a director or shadow director;
cannot enter into contracts on behalf of the company or transact business in the company; and
will not be held liable for any loss suffered by the company from taking on board any of their advice. This indemnifies the board observer in respect of any such loss.

Procedural Matters
The board observer agreement will also state the meetings the board observer can attend, whether this is all or just a select few board meetings. In addition, it will cover what materials the company will provide the board observer in respect of board meetings.

For example, notices of meetings and board papers.

It will also stipulate the situations in which the company may withhold information and exclude the board observer from meetings. This may be appropriate where the board observer has a conflict of interest in a board matter.
Term
A term refers to the length of time a board observer will remain in the role for, usually agreed upon in the board observer agreement. With regard to the board observer’s term, the board observer agreement will usually cover:

the length of time the board observer can be appointed for (the length of the board observer’s term);
the bases of termination of the board observer’s appointment; and
what happens if the board observer’s appointment comes to an end or is terminated.

For example, a requirement that the board observer returns all confidential information upon termination.

Remuneration and Expenses
This clause covers whether the board observer is entitled to receive any remuneration or reimbursement of any or particular expenses.
Company Protections
A board observer is not subject to the same legal duties as a director.

For example, duties to act in the best interest of the company, to keep information confidential and to disclose conflicts of interest.

As a result, your company should protect itself by imposing these obligations through the board observer agreement. Common protection clauses include clause(s) requiring the board observer to:

notify the company if they intend to provide any services to a competitor;
confirm that they will not be in breach of any other duties or obligations they may have with other parties. It may also be necessary to include a non-competition clause depending on the circumstances;
maintain confidentiality in respect of any information provided; and
confirm that all intellectual property created by the board observer in the course of their appointment as board observer vests in, and is assigned to, the company.

Key Takeaways
A board observer is an alternative board role that your company may consider appropriate for the governance of the company and its relationship with investors. When appointing a board observer, both your company and the appointed board observer should be aware of the board observer’s rights and obligations.
By ensuring a board observer agreement is put in place you can properly document:

the role;
the board observer’s rights and obligations; and
provide legal protection for both your company and the board observer.

If you have any questions about drafting your board observer agreements, get in touch with LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post What Is a Board Observer and What Should I Put in a Board Observer Agreement? appeared first on LegalVision.

If you are planning to start a company in Australia, there are several considerations you need to think about before launching your business plans. This article will discuss the key components you should consider before starting your business in Australia.
Why Choose a Company Structure?
Choosing a company structure has many advantages for your business. As a company is its own separate legal entity, one of the major benefits of a company structure is that it limits your liability as owner of the business. This is because company shareholders are only personally liable for the debts or liabilities of the company up to the amount that is unpaid on their shares. Usually, the amount unpaid on shares is zero, so the company structure is particularly suitable for businesses that are going to be risk-taking.
Running your business with a company structure will also maximise its capacity for growth. Companies can raise capital by bringing on shareholders, and investors are more likely to invest in your business if it is an incorporated entity (in other words, a corporation).
How Do I Set Up My Company in Australia?
If you decide to use a company structure to start your business in Australia, it is important that you follow the right steps to set up your company properly. You will need to:

decide on an available company name;
establish your company’s rules;
choose who will run your company. If you live overseas, you will need to find a resident director;
pick your shareholders; and
nominate your principal place of business in Australia.

Appointing a Resident Director
If you live abroad and run a company registered in Australia, you will need at least one resident director. A resident director is a director that ordinarily resides in Australia. They are usually either permanent residents or Australian citizens. After you have at least one resident director, you can start thinking about choosing foreign directors of the company. However, a majority of the directors of your company will need to be resident directors.
You can think of your resident director as your Australian guide. They make sure that your Australian company is tracking smoothly and performing all of its compliance obligations. Your resident director is also responsible for performing a number of important tasks on your behalf, including:

lodging signed documents to regulatory authorities;
representing shareholders to make sure that your company complies with the necessary protocols; and
communicating with financial institutions and regulatory authorities to continue running the company.

Selecting Your Resident Director
Ideally, you should find a resident director who adds value to your business rather than one who only fulfils the legal requirements of running your company. Your resident director needs to be over 18 years of age and a permanent resident or citizen in Australia. They should also be aware of the duties that they will owe to your company and the consequences they will face if they fail to perform those duties.
A director is critical to running a company successfully, and a breach of their duties has serious consequences. As a result, it is a good idea to choose an experienced resident director. You should also make sure they have a clear understanding of the resident director’s role within your company before you invite them on board. It is best practice to put a contract in place that explains:

the services they, as the resident director, will be providing;
their obligations to your company; and
how much they will be paid.

Key Takeaways
Living overseas does not prevent you from starting a company in Australia. If you are looking to start a new venture in Australia, structuring your business as a company offers several advantages. These include limited liability and a maximised capacity for growth. Importantly, you will also need to select a resident director to carry out all of the regulatory and compliance tasks in your absence. If you have any questions about business structuring or about setting up an Australian company from abroad, get in touch with LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post I Live Overseas. How Do I Start a Company in Australia? appeared first on LegalVision.

In order to attract and retain top talent, many companies offer their employees incentives in the form of options or shares. Companies usually establish an Employee Share Scheme (ESS), or an Employee Share Option Plan (ESOP). This provides the employees with options, or the right to acquire shares in the company at a specified time if the employee meets certain conditions. This condition is usually a certain length of service at the company, thus incentivising the employee to stay. If the employee does not fulfil these conditions, the options are known as unvested options. This article will discuss what happens to unvested options if founders and investors in a company decide to sell the company and thereby ‘exit’.
What is an ESOP?
An Employee Share Ownership Plan (an ESOP), or Employee Share Scheme (ESS), is a scheme that provides employees with an ownership interest in the company by giving them company shares or options.
What Are Options and Unvested Options?
When employees receive options under an ESOP, they receive a right to buy shares in the company for an agreed price (also known as the “exercise price”) at a specified time in the future. When employees exercise their options, they convert their options into shares.
However, options normally cannot be exercised immediately. Employees need to fulfil certain conditions first. Typically, one of the conditions is a certain length of service at the company. This is called a vesting period. This vesting period is usually between three and five years.
During the vesting period, the employee holds the options but are generally not entitled to dividends or voting rights. More importantly, they cannot sell their options. When the employee fulfils the conditions, the options vest and the employee can exercise their options. This means they convert the options to shares by paying the relevant exercise price. The employee will then usually receive the full benefits of being a shareholder.
In many startups, the vesting period is four years, with a one-year “cliff”. The “cliff” means that if the employee leaves the company within the first year, no options will vest. Instead, 25% of the options will vest exactly one year after the grant of the options, and continue to accrue every month for the length of the vesting period. This continues until the employee accrues 100% of the options.
An unvested option is an option that has not vested because the employee has not fulfiled the vesting conditions.
What Happens to Unvested Options in Case of an Exit Event?
An exit event is when the owners of a company “exit” the business by selling the business. The three main methods of exiting are either by:

listing the company (Initial Public Offering, or IPO);
selling the assets of the company; or
selling the shares of the company.

If your company has an ESOP in place, the rules of the plan and the associated offer letter should set out what happens to any unvested options in the event of an exit event.
Usually, the rules give the Board of Directors of the company some discretion about how to deal with employees’ options, including the unvested options. The Board may decide to:

buy back or cancel the options at their fair market value; or
allow the outstanding options to vest.

Key Takeaways
Companies often use option plans to retain key talent and provide employees with a long term incentive to stay with a company. When the owners of a company exit the business by selling the company, the Board of Directors will either buy back or cancel unvested options at their fair market value or allow the outstanding options to vest. If you have any questions about ESOPs or unvested options, get in touch with LegalVision’s startup lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post What Happens to Unvested Options in the Case of an Exit Event? appeared first on LegalVision.

Although shareholders are part owners of a company, shareholders, unlike directors, generally do not owe duties to the company. However, there are certain circumstances where a shareholder will have duties to or legal responsibility for a company. These duties or legal responsibility could extend even after they have sold their shares and exited. This legal responsibility is known as liability. This article will discuss when a shareholder may be liable towards a company, even after they have sold their shares and exited.
Liable For a Company as Shareholder
Although a shareholder holds shares in the company, they are legally distinct from the company. As a result, the legal responsibility, or liability, of a shareholder is usually limited to any unpaid amounts owing on the shares.
When you purchase shares from a company, you can pay for shares:

in full;
in part; or
not at all.

When you pay for shares in part or not at all, you the risk that the company can call for the full payment of the shares at any time in the future. This will usually be at a time when cash is not readily available to the company. That risk is your liability, and it is your legal responsibility to repay that amount for the shares. However, if you pay for the shares in full at the time of purchase, you will incur no liability or legal responsibility. However, this will not be the case if you are acting as a shadow director or guarantor to the company.
Liable For a Company as Shadow Director
It is possible for a shareholder to also operate in the role of company director at the same time as being a shareholder. Directors have an obligation to uphold directors duties, and can in certain circumstances be held personally liable for the debts of the company. Even if you have not been formally appointed as a director, you could still be a “shadow director“. A shadow director is someone (a person or corporation) who acts:

as a director;
as someone who has involvement in the management of a company similar to that of a typical director; or
in a manner in which the company is accustomed to act on their instructions, or on their approval.

For example, a shadow director may require the appointed directors of a company to inform them about the company’s affairs or consult them in relation to any decision making.

If you are acting as a shadow director, you can be held personally liable for the debts of a company in the same way that actual directors are. If you exercise a level of influence over the management of a company, it is a good idea to find out whether your conduct is likely to amount to acting as a shadow director.
Liable For a Company as Guarantor
If you have acted as a guarantor of a company’s obligations, you can be held liable for a company’s obligations under contracts.

For example, you may have agreed to act as a guarantor to secure a lease for company premises. This usually means you have provided some sort of security for the lease. This is typically a piece of real property such as a house. The lessor can sell the security (the house) to repay the lease if the company fails to pay for it.
Similarly, you may have secured an agreement to finance company equipment. In that case, the bank can sell the security to repay the loan if the company cannot repay it.

The nature of your liability as a guarantor will depend on factors such as the:

term of the contracts (the length of time that the contract will be binding);
total amount owed under the lease; and
total amount owed under the loan.

Your obligations as guarantor endure for the length of the contract and do not cease when you sell your shares. Many contracts prescribe that the guarantor’s obligations under the contract last beyond the term of the contract. This is in case the company fails to uphold its post-contract obligations.
Depending on your contract, you may ask the company to remove you as guarantor to a contract. However, you would need to review the particular contract in question to determine the requirements for any amendments. Typically, modifications to a contract must be documented in writing and signed by all parties.
Key Takeaways
A shareholder is a partial owner of a company. They have rights and obligations set out in the company constitution and shareholders agreement. Shareholders in a company who are considering exiting a company by selling their shares should consider whether they have outstanding liabilities after their exit. A shareholder can be liable to the company in various roles. This could be as a:

shareholder;
director; or
guarantor.

If you have any questions about your liability as a shareholder after exiting a company, get in touch with LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post I Have Sold My Shares and Exited a Company as a Shareholder. Am I Still Liable? appeared first on LegalVision.

If you operate an online business, online reviews are probably a huge part of your business. Your website itself may have a reviews page, or you may receive reviews from Google, TripAdvisor, or a third party online review platform. It is important to ensure your business’ online reviews comply with the law. This article will discuss the relevant law and provide a few examples and practical tips for online business owners.
The Australian Competition and Consumer Commission (ACCC)
The Australian Competition and Consumer Commission (ACCC) is a regulatory body that enforces various consumer protection laws including the Australian Consumer Law (ACL) and the Competition and Consumer Act 2010. This includes taking action against businesses that do not comply with the relevant legislation. In particular, the ACCC can take action against businesses who engage in misleading and anti-competitive conduct.
Consumers often like to read others’ opinions about an online business before they decide whether to use the business or make a purchase. They should be able to expect that the reviews they read are genuine and unbiased, and be able to trust the reviews. If a business or review platform does not remove reviews that they know are fake they may be in breach of the Competition and Consumer Act.
Managing Online Reviews
The ACCC provides a few useful guidelines for managing your business’ online reviews. In addition to explaining to users how you gather online reviews, the ACCC suggests that you do not:

publish, or ask people to submit, reviews that are false or misleading. For example, do not ask someone to post a positive review in return for a discount on their next purchase as this may encourage reviews that are not genuine;
publish fake reviews about your competitors;
invite someone who has not used your online business’ products or services to submit a review. They will not be able to honestly review your product or services; and
edit or remove reviews.

ACCC Case Study: Meriton
Businesses must not mislead or deceive consumers through the use of online reviews. This is what happened in a 2017 case between the ACCC and Meriton, a popular property developer. In this case, Meriton tampered with the online review process to minimise negative reviews about their serviced apartments and hotels. Meriton used TripAdvisor’s ‘Review Express’ service, where Meriton would provide guests’ email addresses to TripAdvisor, who would then contact guests to request a review. Meriton misled consumers in two ways by:

adding additional letters to email addresses of users who had a negative experience, in particular, users who had already complained. As a result, those users did not receive the emails sent by TripAdvisor; and
removing the email addresses of users who stayed during a disruption such as a power outage or construction work.

As a result, users who were likely to leave a negative review were never contacted and never asked to leave a review. Meriton was fined $3 million for this conduct.
Managing Marketplace Online Reviews
If your online business is a marketplace (e.g. Airbnb, Airtasker and Uber), you may allow users to review service providers, and vice versa, through your website. These sorts of reviews are not regulated by the ACL because they are not about the online marketplace itself but about the service providers. However, it is still helpful to consider how online marketplaces should moderate reviews, and identify fake reviews. Potential users want to be able to assess their potential service provider before engaging them.

For example, they want to be able to assess their Uber driver, or the Airtasker handyman who is going to assemble their new furniture.

There are a few things you can look out for to identify fake reviews. You may notice:

an increase in the number of reviews for one particular provider;
repetitive phrasing in multiple reviews;
multiple reviews from the same name or email address; or
reviews that recommend going to another service provider.

If you know a review is fake you should take action to remove the review, either by reporting the review to the review service provider or, if you are able to, removing it yourself. It is also a good idea to allow users to flag reviews that they find suspect or inappropriate so that fake reviews can be more easily identified and removed.
Key Takeaways
Online reviews are an important tool for online business owners. They are a means of informing future users of the quality of service they can expect. They may also help potential customers or users choose which supplier or service provider they want. Online reviews should not mislead or deceive users about your online business. This means that they should not be false, inaccurate, or biased. Failure to ensure the honesty of reviews may result in a breach of consumer protection laws and may result in a fine or other regulatory action from the ACCC. If you have questions about your business’ online reviews, get in touch with LegalVision’s online lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post I Am an Online Business Owner. What Do I Need to Know About Online Reviews? appeared first on LegalVision.

If you want to work in marketing in Australia, you will likely need to have an occupation that is on the Skilled Occupations List (SOL) to be eligible for a temporary work visa. The Australian and New Zealand Standard Classification of Occupations (ANZSCO) code for each occupation specifies the qualifications and experience required for the position. This article will consider three common marketing occupations in Australia and the specific visa requirements for each occupation.
Marketing Specialist (ANZSCO Code 225113)
If you are a marketing specialist, your role will typically involve identifying market opportunities and advising on the marketing plans for a company’s products and services. In particular, your daily tasks should include:

planning and managing advertising policies and campaigns;
advising executives and clients on advertising strategies and campaigns;
coordinating the production of advertising campaigns (e.g. artwork, scripting, TV production);
analysing consumer data and predicting consumer trends;
researching market characteristics and demand for new goods/services;
preparing and executing marketing objectives to support business growth;
conducting research to identify market opportunities; and
advising on all elements of marketing.

To be eligible for the Temporary Skill Shortage visa (TSS visa) as a marketing specialist, you are required to hold a Bachelor’s degree or higher in the field, or have at least five years of relevant work experience. In some cases, you will be required to have relevant experience and/or on-the-job training in addition to the formal qualification.
If you are sponsored as a marketing specialist under the Temporary Skill Shortage visa (subclass 482), there are other conditions that you should be aware of. In particular, you will not be eligible as a marketing specialist if your:

annual salary is less than AUD $65,000;
potential employer has an annual turnover of less than AUD $1 million; or
position is based in a front-line retail setting that predominantly involves direct and regular client interaction.

Sales and Marketing Manager (ANZSCO Code 131112)
Generally, as a sales and marketing manager, you will be responsible for planning and managing the sales and marketing activities within a business. In particular, your daily tasks should include directing the development and implementation of:

sales strategies and setting sales targets;
strategies to promote an organisation’s goods and services;
strategies to generate increased consumption of an organisation’s goods and services through creating and reinforcing a brand image or loyalty; and
strategies to build and maintain an organisation’s image and reputation with its customers, investors and the wider public.

To qualify for a TSS visa as a sales and marketing manager you will need a Bachelor’s degree or higher in the field, or have at least five years of relevant work experience. Some cases may also require relevant experience and/or on-the-job training in addition to the formal qualification.
However, if you are sponsored under the TSS visa, you will not be eligible for this occupation if your position:

is in a business with an annual turnover of less than AUD $1 million;
has an annual salary of less than AUD $80,000; or
is based in a front-line retail setting that predominantly involves direct and regular client interaction.

Advertising Manager (ANZSCO Code 131113)
As an advertising manager in Australia, you will usually be responsible for planning and managing the advertising activities within a business. This occupation falls within the same unit group as a sales and marketing manager and therefore has the same skill level and qualifications as described above. However, there are no limitations if you are applying under the TSS visa.
Key Takeaways
If you want to work in the marketing industry in Australia, you will likely need to have an occupation that is on the SOL to be eligible for a temporary work visa. The SOL specifies the ANZSCO code for each occupation. You should check the ANZSCO code to understand the skill level, qualifications or experience you need to work in your nominated occupation. If you have any questions about temporary work visas in Australia, contact LegalVision’s immigration lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post I Want to Work in Marketing in Australia. What Are My Temporary Work Visa Requirements? appeared first on LegalVision.

If a business contact has presented you with a product proposal or investment opportunity, they should have provided you with a non-disclosure agreement (NDA). An NDA ensures that all information about their project is kept private. Requiring you to sign an NDA may be important to the other party as they want to protect their confidential information. You should ensure that these restrictions are appropriate and don’t unnecessarily limit your ability to have commercial discussions regarding your potential involvement. This article will go through four sections that you will need to carefully consider if you’ve received an NDA.
1. What Information is Confidential?
If you’ve received an NDA, it should contain a definition of what information will be considered confidential. The other party will want to make this description as broad as possible to capture all the information that you can access. However, having a definition that is too broad means that all information that the other party has provided you might be confidential. Consequently, your ability to use the information in a way that could benefit your business plans will be restricted.
Ideally, the NDA should restrict what information is confidential to only include written information that was specifically marked as confidential when you received it. You should avoid accepting an NDA where all verbal communication is confidential. Instead, the other party should have an obligation to notify you when, specifically, verbal information is confidential.

For example, if the other party wishes to keep everything discussed within a meeting confidential, they should explicitly notify you of this before the meeting. By having this notification in writing, you can avoid ambiguity on what information is confidential. This will minimise the risk of you accidentally disclosing something that you weren’t aware was confidential.

2. What About Exclusions?
Within an NDA, it is important that there are exclusions to what will be considered confidential information. It will be frustrating if the other party claims that information was confidential when it was already public knowledge. You should ensure that, if you’ve received an NDA, it excludes a need for confidentiality for information that:

was or will become publicly available;
you had in your possession before you entered into the NDA;
was independently developed by you without knowledge of the confidential information;
you received from a third-party, and you were not aware that the third-party was under confidentiality obligations.
the discloser advises you is not confidential or which you are permitted to disclose with the discloser’s consent.

3. What is the Purpose of Confidentiality?
If you’ve received an NDA, It is likely that the other party will have set out a specific purpose for disclosing the confidential information to you. You will need to make sure that this purpose is not too narrow or restrictive. If it is, the NDA may prevent you from being able to use confidential information to properly assess a potential investment. The broader this definition is, the more scope you will have to use the other party’s confidential information freely.
You also want to make sure that the NDA will not prevent you from competing with the other party if, in the future, you create products or services that are similar to the other party’s. Within the NDA, you may want to include a provision outlining that the other party cannot prevent you from creating products or investing in businesses that might compete with them. This is as long as you don’t use the other party’s confidential information.
4. When Is Disclosing Confidential Information Permitted?
In addition to having exceptions to confidential information, the NDA should also outline instances where disclosure is permitted. It is crucial that you ensure you are permitted to disclose confidential information to anyone who might help you assess the potential business relationship. These people include your:

employees;
directors;
contractors;
agents; and
professional advisors such as lawyers and accountants.

However, this disclosure will likely require you to assume legal responsibility for these parties if they spread confidential information. To prevent legal issues, you should also enter into NDA’s with these parties.
The NDA that you have received should also permit you to disclose the confidential information if you are under a legal obligation to do so. If a legal authority has instructed you to provide confidential information, the NDA should not prevent you to do so. If you don’t comply with these legal authorities, you may incur a penalty.
The other party might require you to notify them if you have been legally required to disclose their confidential information. Also, if the other party requires you to assist it in trying to limit or prevent the disclosure, you should limit this to an obligation that is commercially reasonable.
Key Takeaways
Before you enter into business discussions, another party may require you to sign an NDA. If you agree to sign an NDA, you need to ensure that you properly understand your requirements under each clause. To prioritise your interests, you should ensure that:

the definition of confidential information is narrow and requires the other party to identify when information is confidential;
there are exclusions to confidential information;
the definition of the purpose is not too restrictive and narrow; and
the NDA permits you to disclose confidential information to your employees, advisers and when required by law.

If you have any questions about getting NDA, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post 4 Key Clauses to Consider if You’ve Received an NDA appeared first on LegalVision.

Legal departments are under increasing scrutiny to deliver strategic value to the business. Like any other function, in-house lawyers are asked to demonstrate their contribution to the business. At the same time, many legal departments are requesting additional budget to tackle increasing workloads with new technology. These requests are typically decided based on legal data, which poses a challenge for legal departments that don’t have numbers to report. 
To address this, in-house legal teams need data. And the only way to get the data is by tracking activity against metrics. This article will explain how you can track data within your legal team. 
Time is Not Enough
Traditionally, the metric that lawyers have focused on is time. However, in the in-house world, the common shortcut (activity tracking = time recording) is unlikely to go far enough. 
How much time someone spends on a task does not provide an insight into how valuable that input is. Furthermore, the time spent on a task says little about the performance of the lawyer. Time input can vary depending on factors outside the lawyer’s control, such as the quality of the instructions given. Poor instructions can result in additional in-house time required to complete tasks. If time is the only metric that you are measuring, this can reflect poorly on your team’s efficiency.
Measuring time as an indicator of performance can also incentivise the wrong type of behaviour. It can also give the impression that you are creating targets to achieve. This can lead to a toxic environment that is not necessarily productive. In-house lawyers should aim to spend a proportionate amount of time on legal work that delivers value to the business in the most efficient way. 
What’s in a (Legal Piece Of) Work? 
As time is not enough to drive decisions, other variables must be analysed to track the lawyer’s activity.
Six different factors influence the effectiveness of an in-house lawyer:

volume of the activity;
quality of the instructions; 
quality of the output;
process methods used;
complexity of the task; and 
priority of the task for the business.

Priority and importance are too often considered to be the same thing. When a task has an immediate deadline, we often drop everything to complete it. This can lead to rushing through a complex activity, which subsequently impacts how effectively the work is delivered. 
This is why it is crucial to move away from the traditional model of tracking time. By doing so, we can better accommodate the notion that time doesn’t necessarily mean value, and priority doesn’t necessarily mean importance. Tracking the activities of your lawyers and capturing these additional metrics will enable you to assess whether the lawyers are spending time in the right way. 
How to Make It Work
Even if your in-house team can agree that data is important, it can be challenging to implement the right system to track it. Most in-house lawyers have been freed from the burden that is common at most firms of having to track their daily activity. 
However, if you want your lawyers to begin tracking their activity, you must ensure that these tracking activities are: 

simple;
efficient; and 
not focussed on performance management. 

If your legal team already has a matter management system in place, this likely provides you with much of the data that you need to know. If you don’t, you have the option of acquiring a purpose-built software that will track your team’s activity. 
However, both options will require an investment. This could lead to a chicken and egg situation because you need the data to justify investments but cannot collect the relevant data in the first place. 
It Can Be as Simple as Excel
A snapshot of the activity levels in your team over a certain period of time can be enough to prove that investing in a data tracking system will be worthwhile. In this situation, a simple exercise in Excel can produce everything you need. Here, you can pick which data you want to monitor and track metrics that other management systems can’t.
However, this process will take time to set up and implement. You will want to set up the framework in a way that minimises the time and effort required from your team to input data. Here, creating scales or using pre-filled forms is useful to minimise their effort. 
It is likely that time will still be one of the metrics you will be tracking. However, instead of referring to minutes, we recommend allocating percentages of time to different tasks.

For example, set that 30% of a day should be spent drafting X agreement. 

Tracking time as a percentage can help remove any worry about being performance managed and the impression that it’s about how hard people are working.
You should also consider tracking the factors that impact the amount of time an in-house lawyer spends on a task. For example, you can record the:

quality of the instructions;
business unit responsible;
quality of output expected;
time spent on the task;
expected value of the legal work; 
type of work required (advice, drafting, review, etc.); 
complexity of the task; and
priority for the business.

Running this exercise will enable you to identify any inefficiencies or inconsistencies by making correlations between the time spent on a task and other factors. 
The Power of Data 
The in-house lawyers we work with are always busy. However, while managing your in-house team, you need to measure whether they are busy with the right work. Measuring the strategic value of legal activities will enable you to make data-driven changes. 

For example, you might want to consider drawing on the data to: 

implement a process for prioritising legal work;
categorise matters according to what is complex and simple, high or low strategic value, and allocate resources accordingly;
train your commercial team to do some secondary legal activities so that your in-house lawyers can focus on core legal activities;
invest in legal technology; and
develop document automation for simple matters.

To make those changes, you need to highlight the value of your team and build a business case based on the set of data. This will unlock a unique opportunity to engage in a meaningful dialogue with the business and demonstrate that your legal department is a  powerful instrument for generating value and securing a competitive advantage.
Key Takeaways
By referring to a set of objective data, in-house lawyers can demonstrate their strategic value to stakeholders. As the outcome of legal work is subjective, tracking legal activity is the best way to capture data on performance. Tracking time on its own is unlikely to get you to where you need with your data. For the most useful results, in-house teams should keep track of the different variables that affect how much time lawyers spend on a task, such as the:

quality of instructions; 
volume of activity;
quality of output;
processes used; and 
the complexity of the task.

If you have any questions about using data within your in-house team, contact LegalVision’s legal transformation lawyers on 1300 544 755 or fill out the form on this page. 

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post How Your In-House Team Can Use Data to Track Legal Functions appeared first on LegalVision.

The emergence of artificial intelligence (AI) has the potential to revolutionise the practice of law. When we consider how emails changed the way we do law, it is not hard to believe that new technology will impact the legal industry. But what is AI? The term is thrown around a lot, but it can be confusing to understand what AI products are out there. This article will provide an overview of what AI actually is and illustrate how it impacts the legal industry.
A History of Artificial Intelligence
AI is a broad concept that refers to the intelligence of machines, in comparison to the natural intelligence of humans.  AI was a notion born in the post-war technological optimism of the 1950s. It grew from statistical and mathematical theories of the time in an attempt to mimic human capacities for problem-solving. Initially, people used AI to play checkers.

A few examples of AI that have become prevalent in our lives are: 

Gmail (through its email filters and smart replies);
Amazon’s Alexa; and 
Pandora Radio.

While AI is the initial and all-encompassing concept, machine learning and deep learning have also brought technological advances.
Machine Learning
Machine learning is a subset of AI that focuses on using computers and algorithms to allow systems to learn and improve from experience without someone having to explicitly program it. Entrepreneurs have increasingly used machine learning to help computers process camera images to detect shapes.

For example, in the way that self-driving cars (like Tesla’s) can identify people and ensure not to hit them.

Neural Networks & Deep Learning 
Neural networks are a subset of machine learning. They use a unique method of learning that (somewhat) mirrors the brain. Basic machine learning models improve from experience and get better at whatever their function is, but they do need some guidance. 
The algorithms in neural networks can determine on their own if a prediction is accurate or not. Neural networks can be ‘shallow’ in their structure (i.e. having less complexity) or ‘deep’ (having more complexity). When they are more complex, they are known as ‘deep learning’. Deep learning was popularised in 2012 when Google employee Andrew Ng trained a computer to find images of cats after processing cat videos from youtube.

A current example of Neural networks is Google’s Alpha Go. Alpha Go is a computer program that engineers built to play the ancient Chinese game of Go. The sheer volume of possible moves meant that it was not viable to calculate every possible move to find the best one. In a historic moment, Alpha Go famously defeated Go world number 1 Lee Sedol in 2016 by using smart algorithms that were able to detect the most powerful moves.

Current Impacts of AI on Law
On 14 January 2011, IBM’s supercomputer ‘Watson’ played Jeopardy! against the world’s two best players at the time. This was a successful demonstration of the ‘intelligence’ of computers, with IBM’s supercomputer winning the game. Watson’s engineers have now trained it to retrieve law-specific information as a method of supporting lawyers in their jobs. However, there are many other ways that AI can impact the legal profession.
Legal Research
Due to the complexity and ever-changing nature of the law, being on top of legal changes is integral for legal practitioners. However, doing legal research is one of the more time-consuming facets of the job. To combat this issue, companies like ROSS Intelligence have been developed. 
Based out or San Francisco, ROSS uses AI and natural language processing methods to deconstruct research queries framed in everyday language. This means that the software is able to:

interpret the meaning of the question;
break it down into its relevant parts; and 
begin to search the appropriate databases for the answers to these queries. 

In some way, this could be described as a highly advanced Google search engine for the law.

Lawyers have used this technology to shorten the time they spend on research and cut out the somewhat repetitive tasks of trawling websites and cases for information.
Chatbots
Another area that AI has been applied to is chatbots. A chatbot is a computer programme that imitates human conversation. Artificial intelligence makes it possible for chatbots to learn by discovering patterns in data when it takes the form of:

natural language processing; 
deep learning; and 
machine learning, 

Chatbots are catered to the public, rather than lawyers. These applications of AI are slightly more simplistic as they primarily serve as an interface between the public and simple pieces of legal information.

One example of this is the software called DoNotPay, which helps people appeal parking tickets. Since 2016, this software has helped to appeal over 150,000 parking tickets in the US and UK. 

In a similar way to how robots have drastically reduced headcount in factories, chatbots have the potential to impact headcount in any client facing industry, including the legal sector. This form of customer relations is unique in that chatbots are:

available 24/7;
require minimal upkeep costs to run; and 
able to provide clients with legal help at a moment’s notice. 

This means that lawyers’ jobs may be made easier by chatbots that are able to distil the primary concerns of a client through an AI-powered ‘initial consultation’.
Further, when augmented with the right technology, these chatbots may be able to inform the relevant lawyer of these points through an automatically generated and partially-filled advice document, thus drastically reducing the time needed to provide a particular client legal advice. 
Big Data Analytics
Big data analytics is the use of advanced analytic techniques to examine large amounts of data and uncover hidden patterns, trends, correlations and preferences. With AI, organisations can analyse data and identify insights almost immediately. 
Big data analytics comes in three primary forms. 
The first form of big data analytics is descriptive analytics. Descriptive analytics integrates machine learning and natural language processing to process large amounts of legal information and derive useful insights. This might include analysing the behavioural tendencies of litigation participants or identifying long-term trends in the law.

You can then use this information to construct stronger and informed strategies for:

winning cases;
predicting litigation costs; and 
making decisions on whether or not to settle.

The second form of big data analytics is predictive analytics. This creates holistic profiles of a given group or individual and predicts behaviour. You can then use this information to understand the tendencies of juries or judges and deliver information accordingly. Legal tech startups have already sprung up around this area.

For example, the US-based Judge Analytics provides a comprehensive statistical analysis of every judge across every US court.

The third form of big data analytics is prescriptive analytics, which offers advice based on probable outcomes. Prescriptive analytics recommends specific courses of action and informs on the likely outcome. This technology tracks the outcomes of legal decisions and refines its recommendations. Effectively, prescriptive analytics is another layer of information processing that was once done manually to garner insights into the law.
Key Takeaways 
AI is an extremely powerful and exciting field. It’s only going to become more critical and ubiquitous moving forward, and will certainly have an impact on the legal industry. Neural networks and deep learning are some of the most capable AI tools for solving very complex problems. Chatbots, AI-augmented legal researchers and big data analytics are examples of how AI has started to transform the legal landscape. If you have any questions on how best to use AI or other legal technologies within your team, contact LegalVision’s legal transformation lawyers on 1300 544 755 or fill out the form on this page. 

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post How the Emergence of Artificial Intelligence Impacts the Law appeared first on LegalVision.

Keeping good relations with contractors is essential for every small business. Disputes with contractors arise and can cost your business valuable time and money if they are not resolved quickly. You should try to handle a dispute with a contractor to avoid:

long-term damage to your business or your relationship with the contractor; and 
the need to go to court.

This article will guide you through the steps to deal with a dispute with a contractor to minimise the impact on your business. 
Check Your Contract
The first step to resolving any dispute with a contractor is to carefully review your contract. If you do not have a formal written agreement, review any emails or other correspondence between you and the contractor regarding the work provided. This correspondence may amount to a binding agreement. 

For example, you may have email correspondence that sets out:

pricing;
the scope of work; or
any relevant timeframes. 

Keep in mind the issues in dispute when reviewing your contract or correspondence. If you are unhappy with the goods provided or services performed by the contractor, read the wording of any clause relating to their obligations regarding goods or services to check if they have breached your agreement.
You should also check if your contract includes a dispute resolution clause that sets out the steps the parties should follow if there is a dispute. If the matter ends up in court it can be helpful to show that you followed this procedure. 
Communicate and Negotiate 
You may be able to resolve most disputes with contractors by keeping the lines of communication open and negotiating a settlement. This is the most efficient way to settle a dispute with the least impact on your business. You are more likely to end up in expensive and time-consuming legal proceedings if you do not communicate and listen to the contractor. You should approach any negotiations calmly and professionally and be prepared to compromise. 
During negotiations, clearly communicate to your contractor: 

the issues in dispute and, if relevant, what you believe they have done or failed to do; and
how you want the contractor to fix the issue, including a specific timeframe.

Give them the chance to respond.  Often, disputes are the result of misunderstandings or miscommunications that can be solved by open communication. This approach will most likely keep your relationship with the contractor alive.
Mediation
If you cannot resolve the dispute by communicating with the contractor, you may need a third party to assist with more formal negotiations. Mediation is a process run by an independent person (the ‘mediator’) to help parties work through the issues in dispute. Any agreement reached by the parties can be confirmed in a written agreement that is then binding. The agreement should: 

include the terms of the resolution; and
be signed and kept by both parties. 

Mediation can be a cost-effective option to settle a dispute without going to court.  
Arbitration
Arbitration is another form of dispute resolution that you and a contractor can use to attempt to settle your dispute. It is a more structured process than mediation, but it is less expensive and formal than court proceedings. It can only take place with consent from both parties. An independent ‘arbitrator’ acts as a judge to determine a result. This result can be binding on the parties and is enforceable, similar to a judgment of the court. Because of this, you should seek legal advice before agreeing to an adjudication.
Unlike court proceedings, the parties can choose how to carry out the process. This may depend on the circumstances of the dispute. For example, the parties may decide together whether any evidence is required. 
Go to Court
Court proceedings, or litigation, should be your last resort. Going to court is time-consuming and expensive. There is also no guarantee you will be successful, even if you believe you have a strong case. You can represent yourself in court, or at a lower tribunal like the NSW Civil and Administrative Tribunal (NCAT). However, a lawyer will be able to advise you on the strengths of your case and how best to present your position and evidence. You may also be disadvantaged if the other party has a lawyer and you do not. 
If you are successful, the magistrate or judge will make a judgment against the contractor. They may order that the contractor pay your legal costs. However, if you are not successful, the court may order you to pay the contractor’s legal costs. If you intend to go to court, you should seek legal advice on your prospects of success.
Key Takeaways
You may be able to resolve many disputes with contractors quickly and easily by clear, calm communication and keeping an open mind. Follow the steps set out above to attempt to resolve the dispute before the situation escalates. If it does, you may need to use alternative dispute resolution processes or even take legal action.  A lawyer can advise you on the best course of action for your business. 
If you have any questions about dealing with a dispute with a contractor or need assistance in resolving a commercial dispute, contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page. 

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post 5 Ways to Resolve a Dispute with a Contractor  appeared first on LegalVision.

If you are in the construction industry and engage in work which involves Commonwealth funding, it is likely that the Code for the Tendering and Performance of Building Work 2016 (the Building Code) applies to you. If the Code covers you, you need to comply with certain mandatory requirements. It is essential that you are aware of and understand your obligations under the Code. This article will discuss the Building Code, how it may apply to you and your potential obligations under the Code.
What Is the Building Code?
The Building Code covers contractors or construction industry participants, also known as ‘code covered entities’. A building contractor or building industry participant becomes a code covered entity from the first time it submits an expression of interest or tender for Commonwealth funded building work.
Commonwealth funded building work includes:

building work that is being undertaken for, or on behalf of, a funding entity. A funding entity, otherwise known as a Commonwealth entity, could be a

Department of State;
parliamentary department;
listed entity; or
body corporate established by a Commonwealth law;

building work that is indirectly funded by the Commonwealth by a grant or other program where the building work is a component of the grant or program. In these cases, the funding from the Commonwealth body must be at least:

$5,000,000 and represents at least 50% of the total construction project value; or
$10,000,000 (irrespective of its proportion of the total construction project value).

For example, the Department of Education and Training (the Commonwealth entity) is undertaking to build a school. A grant, which the school is a key part of, is funding the building of the school.

If you submit a tender or expression of interest for any construction related work on projects that receive funding from a Commonwealth entity, you can become a code covered entity even if you do not win the relevant work.
There are some building projects which may be exempt from complying with the Building Code, including those involving essential services such as:

electricity;
natural gas;
water;
wastewater; and
telecommunications.

What if the Building Code 2016 Applies to Me?
If you are a code covered entity, the Building Code applies to you. This means you must comply with the Building Code’s requirements. It is important to note that once you become a code covered entity, you will always remain one.
The Building Code contains requirements with respect to the engagement of subcontractors and enterprise agreements. For all Commonwealth funded projects, you will need to ensure that the following people comply with the Building Code:

subcontractors, by ensuring that subcontractors’ agreements contain an obligation to act consistently with the Building Code; and
respondents to the expressions of interest you seek or tender.

In particular, you will also need to ensure that subcontractors under the Building Code:

are not subject to any exclusion sanctions;
do not enter into enterprise agreements which contain prohibited terms(for example, clauses which discriminate); and
take action to rectify behaviour that is non-compliant, as far as is reasonably practical.

Other Requirements in the Building Code
There are several provisions in the Building Code dealing with enterprise agreements. An enterprise agreement is an agreement which sets out the employment conditions under which an employee or group of employees will work for an employer. If you are the head contractor, you also need to ensure your subcontractors on Commonwealth funded projects comply with a relevant Workplace Relations Management Plan.
The Building Code 2016 prevents code covered entities and their subcontractors from entering into or operating under enterprise agreements which are not compliant with the Fair Work Act. However, it does not extend to operate in relation to common law employment agreements with individual employees. Common law employment agreements may be in the form of industry or modern awards that cover employees even where there is no enterprise agreement.
There are other employment-related provisions preventing code-covered entities and their subcontractors from engaging in sham contracting. Sham contracting is when an employer engages (or proposes to engage) an individual to perform work under a contract to carry out services where the true character of the (proposed) engagement is that of employment.
You should also be aware of your obligations under the Building Code when you are engaging workers who are not Australian citizens or permanent residents. In these circumstances, you need to be able to show particular requirements to comply with the Code. You should also ensure that your contracts with your subcontractors are compliant with your state’s security of payment legislation.
Key Takeaways
You may be a code covered entity that needs to comply with the Building Code 2016 if you are undertaking any work which is Commonwealth funded (partially or wholly), or if you have submitted a tender or expression of interest in relation to this type of work. You will also need to be careful to ensure your enterprise and subcontractors’ agreements you enter into comply with the Building Code. If you have questions about construction contracts, contact LegalVision’s construction lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post I’m a Building Contractor. How Do the Building Code Regulations Apply to My Building Work? appeared first on LegalVision.

As a company director, you may have thought about lending money to a shareholder or forgiving a loan you provided in the past. A forgiven loan is a loan that no longer needs to be repaid. You need to think carefully before forgiving a loan as it can have significant tax consequences. If you do, you may need to prepare a Division 7A compliant loan agreement. This is a special type of loan agreement, which results in the loan or forgiven debt being treated as a loan rather than as assessable income for tax purposes. This article will discuss what a Division 7A loan is and the importance of preparing a Division 7A loan agreement.
What Is a Division 7A Loan?
Division 7A is a section of the Income Tax Assessment Act 1936 (Cth). Importantly, the definition of a “loan” under Division 7A has a broader meaning than a normal loan. According to Division 7A, a loan includes:

an advance of money;
a provision of credit or any other form of financial accommodation (money for financial assistance or benefit);
payment for a shareholder or their associate on their account; behalf; or at their request, if they are obliged to repay the amount; and
any form of transaction that is the same as a loan of money.

Why Do I Need a Division 7A Loan Agreement?
A Division 7A loan agreement covers certain payments, loans and debts made by and forgiven by a private company (Pty Ltd). Without a Division 7A loan agreement, these payments or loans would, for tax purposes, be treated as assessable income of the recipient.

Division 7A does not apply to public companies.
Note, however, that there is a very extensive definition of what constitutes a public or a private company for tax purposes and it is not simply a matter of a company’s corporate law status.

In practice, this means that if your company loans money to a shareholder or its associates without a compliant Division 7A agreement, the loaned amount will be included in the shareholder’s assessable income for the tax year. This means they will need to pay tax unless an exception applies. The legislation regulates this area heavily to avoid companies offloading tax-free benefits to its shareholders.
What Does A Division 7A Compliant Loan Agreement Cover?
Where a Division 7A loan agreement is in place between a private company and a shareholder or shareholders’ associate, Division 7A will no longer apply. The terms of the agreement must comply with the provisions of Division 7A. If the terms comply, the relevant loan amount is treated as a loan by the company to the shareholder and not as assessable income for tax purposes. This loan will be subject to interest and the repayments must be made in accordance with the terms of the Division 7A loan agreement.
The Australian Tax Office (ATO) has created a calculator that should provide some guidance as to whether the loan you are considering is compliant with Division 7A, including the:

minimum interest rate you may charge;
minimum required repayments of interest and principal; and
term of the loan.

The Difference Between Payments and Loans Under Division 7A
Compliance Requirements For “Payments”
Division 7A treats various amounts of money as dividends paid by a private company. Amounts that Division 7A apply to are assessable income for tax purposes. Importantly, Division 7A defines a payment or credit to a shareholder as a payment to a shareholder as long as it is:

to the company;
on behalf of the company; or
for the benefit of the company.

This means that the company does not necessarily have to make the payment directly to the shareholder.

Amounts Division 7A can apply to
When will Division 7A apply?

Amounts paid by the company to a shareholder or a shareholder’s associate.
If the payment was made to the shareholder or associate because of the company’s position.

Amounts lent by the company to a shareholder or shareholders associate.
If the loan made during the year is not fully repaid by the company’s tax return lodgement date or put on a complying loan footing.

Amounts of debt owed by a shareholder or shareholders associate to the company that the company forgives
If all or part of a debt owed to the company in the year is forgiven in that year.

Compliance Requirements For “Loans”
There are different Division 7A compliance requirements for secured and unsecured loans. When a borrower secures a loan against a piece of property, it is known as a secured loan. The property could be a house or a car. If the borrower is unable to repay the loan, the lender can sell the property to repay the loan. An unsecured loan is thus riskier for the lender as there is no security for the loan.
There are two types of complying Division 7A loan agreements:

an unsecured loan, which has a maximum term of seven years; or
a secured loan with a maximum term of 25 years, secured by a mortgage over real property (where the market value of the property is at least 110% of the loan amount).

For both types of loan agreements, the legislation sets a minimum repayment of loan principal and interest that must be paid each financial year. The interest rate applicable on a complying Division 7A loan agreement is based on the home loan rate and varies each year.
Does Division 7A Apply to Trusts?
Division 7A can apply to trusts, depending on the situation. Division 7A can apply to unpaid present entitlements. An unpaid present entitlement is a sum of money that a trustee (the person who owns the trust) appoints, but does not pay, to a private company that benefits from the trust (beneficiary). When a Pty Ltd company has unpaid present entitlement from an associate trust, Division 7A can apply if the:

unpaid present entitlement amounts to the provision of financial accommodation, which is a loan for Division 7A;
trustee makes a payment or loan to a shareholder of the private company or their associate during the year, either directly or through one or more interposed entities; or
trustee forgives a debt owed by a shareholder of the private company or their associate during the year.

Mistakes to Avoid Making in a Division 7A Loan Agreement
Making an error in your loan agreement may mean that your loan agreement is no longer Division 7A compliant, making the amount of the loan assessable for tax purposes. There are several mistakes you should be aware of and actively avoid in your loan agreement:

timing issues with signing the loan agreement;
not repaying the minimum loan repayment;
miscalculating distributable surplus; and
not recognising how Division 7A affects trusts.

Key Takeaways
As a business, you may have legitimate reasons for lending money to a shareholder or your associate. It is important to ensure that you understand the potential tax consequences of doing so. More importantly, simply having a “loan agreement” may not be adequate. You will need to consider having the arrangement and preparing a Division 7A compliant loan agreement. If you have questions about Division 7A loan agreements, contact LegalVision’s taxation lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post What Is a Division 7A Loan and When Do I Need One? appeared first on LegalVision.

When you buy a franchise, you receive what may seem like an overwhelming amount of information. One of the most important documents you will receive during the application process is the disclosure document. This document discloses key information about the business you are thinking of purchasing.
This article will outline how you can use the disclosure document to understand:

the franchise brand;
the fees you will pay; 
how the business operates; and
your obligations as a franchisee.

Understanding the Franchise Brand
The disclosure document will typically provide details about the key management personnel in the franchise business.

For example, it might include information on the length of time they have: 

worked in the franchise system;
worked for the franchisor; or
operated a business in the same industry as the franchise.

This information can reassure you that you will be working under a management team with sufficient industry experience. This should mean that they will be able to provide the advice and insights you may need.
You will also receive information about any current legal proceedings against the franchisor or any of the franchise directors. You may also learn if the franchisor or a member of the management team has ever been: 

convicted of a serious offence; or
declared bankrupt or insolvent.

Hopefully, this will reassure you that you are joining a legally sound business.
Understanding the Franchise Fees
Your disclosure document should include details of all the fees you will need to pay to the franchisor as part of your purchase. Typically, these fees will include: 

initial fees (e.g. fees that cover basic training, system support and marketing material fees);
royalty fees; and 
advertising or marketing fees.

There may be other fees you will need to pay. Reading the disclosure document and asking the right questions during the application process can allow you to avoid paying any unexpected fees. 
Understanding How the Business Operates
Some of the most valuable information in the Disclosure Document is a list of current franchisees. This list should include enough information for you to contact the franchisees. Take advantage of this opportunity to learn about how the franchise operates by calling as many franchisees as you can during the application process. You may want to ask them about:

their relationship with the franchisor;
the current state of the industry;
any hidden costs or fees; and
their experiences as a franchisee generally.

Understanding the Franchisees’ Obligations 
Your due diligence should help you to determine whether the franchisor will give you the support you need to run a successful business. 
However, you will also be required to meet certain contractual obligations as a franchisee. Your disclosure document may specify:

any marketing obligations you are responsible for; and
the details of the franchise operations manual, which explains the day-to-day systems involved in running your business.

You should fully understand the obligations you are committing to before you purchase your franchise business. 
Marketing
Another way to find out how the franchisor will support the overall success of your business is to check if the franchise has a marketing fund. Your disclosure document will indicate whether this is the case. 
The franchisor is obligated to disclose which expenses the marketing fund can be used for and provide examples of how it was spent over the last financial year. 
After reviewing the marketing fund, you should conduct a quick online search to see how effective any marketing is. You will be able to make a more informed decision about your purchase by spending some time browsing any relevant social media platforms, such as the franchise’s: 

Instagram profile;
Facebook page; and
Twitter profile. 

Looking up these platforms can help you to determine the franchise’s audience and popularity. Remember that the franchise’s brand is a significant part of what you are paying for. 
Operations Manual
Your disclosure document may state that you must comply with the details set out in your operations manual. The manual may be an essential guide to running your new business, but you should find out how closely you need to follow it to meet your obligations as a franchisee. Failing to do so could mean that you accidentally breach your franchise agreement. 
On the other hand, you should be cautious if you receive a very short or simple operations manual. If the operations manual does not provide you with a comprehensive guide on operating the business, it could indicate that the franchisor does will not offer you much support as a franchisee.
Key Takeaways
If you are purchasing a franchise, you will receive a lot of valuable information during the application process. You should take the time to carefully read and understand it.
One of the most important documents you will receive is the disclosure document. This document will provide you with invaluable insight into how the franchise works. You should use it to make an informed decision about purchasing the business. If you have any questions or need advice about purchasing a franchise, contact LegalVision’s franchise lawyers on 1300 544 755 or fill out the form on this page.
 

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post I Am Buying a Franchise. How Do I Use the Disclosure Document? appeared first on LegalVision.

If you advertise your products in Australia, you need to comply with various industry codes, including the Environmental Claims Code. These codes set out the rules your advertising and marketing materials need to follow. This includes advertising or marketing materials:

published or broadcasted in any medium;
that draws the attention of a segment of the public; and
that intends to promote or oppose (directly or indirectly) the:

product;
service;
person;
organisation; or
line of conduct.

The AANA Environmental Claims Code
Ad Standards is the advertising industry’s self-regulatory body. They administer several industry codes on behalf of the Australian Association of National Advertisers (AANA).
One of these industry codes is the AANA Environmental Claims Code (the Environmental Code). This code applies to you if your advertising or marketing collateral make express or implied claims relating to the environment. These claims could be:

an aspect of your product or service; or
a component of your product or service (for example, your product’s packaging).

Misleading or Deceptive
Under the Environmental Code, your advertising or marketing materials must not be:

misleading or deceptive; or
likely to mislead or deceive.

Firstly, the central portion of the advertisement must be able to stand alone without being misleading.

For example, the central part of the ad should not need disclaimers or limitations to not be misleading.

In addition, disclaimers or limitations in the advertising or marketing collateral claiming environmental benefits need to be shown clearly and in plain sight.

For example, if the environmental benefit only concerns a particular aspect of your product or service, then you will need to specify this on the advertising or marketing collateral. You will need to do so to avoid being misleading or deceptive.

For example, your product’s packaging is made from environmentally friendly material. You cannot claim that your entire product is made from environmentally friendly material when this claim only applies to your packaging.

A Genuine Benefit to the Environment
Any environmental claim must be a genuine benefit to the environment. You also cannot use an environmental claim to imply that your product or service “is more socially acceptable on the whole”. You cannot disregard the non-environmental detriments of your product or service.

For example, you cannot use an environmental statement to claim that your product is, on the whole, socially acceptable when your product or service has other non-environmental detriments.

Furthermore, you cannot mislead a consumer to think you have voluntarily adopted an environmental practice if that practice is mandatory for all the businesses in your industry. You cannot mislead a consumer into thinking your business practice is ethical when you are merely adhering to a mandatory requirement.
Using Third-Party Testimonials
If you wish to use testimonials to make environmental claims, the testimonials have to be:

genuine;
current; and
sought from an informed person.

What Must I Do When Making an Environmental Claim?
Firstly, you must make sure you have a reasonable basis to make the environmental claim that you are making.
Secondly, you must be able to substantiate and verify the environmental claims you make. You also must meet any applicable standards in relation to those claims.
What Happens if Someone Makes a Complaint About My Advertising?
A panel appointed by Ad Standards handles any complaints made against advertisements. If a third party lodges a complaint about your advertising, you will be notified and requested to respond. The panel is then able to obtain expert advice on the information provided by you and the complainant.
Finally, the panel will consider the complaint and determine whether or not your environmental claim breaches the Environmental Code.

It is best practice to provide supporting documents or information concerning the environmental claim so that the claim is easily evaluated. Supporting documents or information could include any credible evidence concluded in a balanced manner or reports based on research and studies.

Key Takeaways
It is important that your advertising and marketing collateral comply with relevant industry codes. You will need to adhere to the code of practice outlined in the AANA’s Environmental Claims Code if your collateral makes environmental claims. If a third party has lodged a complaint about your advertising or marketing material, you will need to draft a response to the complaint. If you have any questions about how the AANA codes affect your advertising and marketing activities, contact LegalVision’s marketing compliance lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post My Advertising Makes Environmental Claims. Are There Any Advertising Regulations I Should Follow? appeared first on LegalVision.

Clean energy is becoming increasingly important to many households and businesses. If you have previously worked in a related industry, you may be looking to capitalise on the trend and start a solar installation business. If so, it is important that you establish your new business with sound legal documents in place. Doing so allows you to:

clearly state how your commercial relationships with suppliers and consumers will operate;
limit your liability; and 
reduce the risk of a dispute arising.

This article will outline what licenses you need to start your business and what to look for in your terms of trade and supply agreement.
What Licenses Do I Need? 
Before you start your business, make sure that you are licensed to install solar panels. Each state has different licensing requirements. 

In New South Wales, for example, you must hold building and electrical licences to install solar panels on the roof of a residential property or other premises. 

A building contractor may enter into contracts to install solar panels, but somebody holding an electrical licence must also be hired under the contract. This person must carry out all required electrical wiring work. Regardless of whether the premises are residential, commercial or industrial, it is illegal to carry out electrical wiring work without an electrical contractor licence or a qualified supervisor certificate. If you plan to connect premises to the electricity distribution network, you must:

meet further qualification requirements; and 
be an accredited service provider.

What Will My Terms of Trade Be?
Once you have confirmed that you meet your state’s licensing requirements, you should prepare a business plan. You will then need to draft your terms of trade. These terms outline the terms and conditions under which you will install the solar panels. You will need to enter into contracts outlining these terms with your clients. Residential building work is governed by different laws in each state, so you may need to prepare separate sets of terms if you are installing solar panels at both residential and commercial premises. Some of the key terms to include are outlined below.

There are mandatory requirements for what you should include in a residential building contract. These requirements depend on the price of the contract. If the residential building work is worth between $5,000 and $20,000, you will need a small jobs contract. If the work is worth over $20,000, it requires a more detailed home building contract.

Goods and Services 
Your terms should clearly outline the nature of the goods and services you are providing. In this case:

the goods will be the solar panels, assuming you are also selling these to the client; and
the services will be the installation of the solar panels. 

If this is left unclear, the goods and services you provide might not meet your clients’ expectations. If this happens, your clients may request that you provide additional goods and services at no further cost.
Pricing, Invoicing and Payment
Getting paid is important to all business owners. Your terms should clearly set out how payment will work. Consider: 

what price is due upfront; 
what price is due over the course of the project; and
when any further costs are due. 

What happens if clients fail to make their payments should also be clear. 

For example, if payment is not made, you could cease to provide the goods and services until the amount is paid. You could also charge interest on any outstanding amounts.

Warranties
Warranties are assurances that you should try to obtain from your client. For example, you will want to ensure that the:

premises are safe for your workers; 
client has the relevant permissions to have the solar panels installed; and 
client is the lawful owner of the premises or has the permission of the lawful owner to install the solar panels.

Termination
In most cases, installation of the solar panels will take place as planned. However, you should set out what happens if one party wants to terminate the terms. The termination clause should outline: 

when a party may terminate the terms; and
what the consequences will be. 

For example, if your client terminates the contract, you will need to know whether can:

retrieve the solar panels from the premises; and 
charge your client your additional costs of doing so.

Supply Agreement
Most owners of a solar installation business will need to source their solar panels from a supplier. Finding a good supplier is crucial. Your supplier will directly affect the reputation of your business. Once you have found a supplier you are happy with, you will enter into a supply agreement with them. Some of the key clauses to consider in your agreement are outlined below.
Product Appointment Types
You should negotiate whether the agreement will be: 

exclusive (i.e. your business is the only solar installation business that can sell these solar panels in the area); or 
non-exclusive (i.e. the supplier can sell to your competitors). 

This is a key clause. Make sure that you discuss it with your supplier before having any contracts drawn up.
Goods and Price
A key concern will be what goods you are getting and for what price. You may need to order a wide range of goods from your supplier. Goods and prices may vary from order to order. If you have negotiated a good price for the goods, it is important to ensure that your agreement specifically indicates that this is the agreed price.
Forecast
A forecast clause requires you to provide the supplier with an estimate of how many solar panels you will need in the future. This can work in your favour, as the supplier will be aware of how many solar panels you are likely to need. The supplier can then ensure they have enough stock.
Order and Delivery Process
Be very clear what happens after you have placed an order with your supplier. Your order should set out: 

how many solar panels or parts are being ordered;
what the specifications of the model are;
where the solar panels are being delivered to; and 
when the solar panels are being delivered.

Defects
Receiving defective solar panels from your supplier could damage your business. It is very important that your supply agreement addresses what will happen if the supplied goods are defective. Usually, you must notify the supplier that the goods are defective within a set time. The supplier may then resupply the goods or provide a refund. 
You should also ensure that the supplier provides warranties assuring you of the quality of the goods they are supplying.

For example, the supply agreement should expressly provide warranties relating to:

the quality of the goods;
whether the goods are fit for purpose; and
whether the goods are of merchantable quality (i.e. generally of a suitable quality).

It is important these warranties are set out in writing so you can rely on them if the goods do not meet such criteria.
Key Takeaways
Starting your own solar installation business may be a profitable decision. Before you start your business, ensure that you:

are licensed to carry out the work; 
have found an appropriate supplier; and
have clients that want your services. 

When you start engaging suppliers and clients, you should already have your business’s terms of trade drafted and your supplier agreement formalised in a contract. This ensures that how your business relationships will work is clear to all parties. If you have any questions, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

Was this article helpful?

Thanks!

We appreciate your feedback – your submission has been successfully received.

The post I Am Starting a Solar Installation Business. What Legal Documents Do I Need?   appeared first on LegalVision.