It is the new year and the end of a decade. Whether you are intending on starting a new business, growing your existing business or potentially exiting your business, the start of the year is a great time to ensure that you and your business are in the best position they can be to enter the new decade.
We have taken the opportunity, early in the new year, to set out our key reminders of matters you may wish to consider addressing at the start of the year to ensure you are well placed to focus more on strategic and operational business matters throughout the year.
Starting a business in 2020
If you are considering starting or acquiring a new business in 2020, then setting up your business correctly from the outset will save you time, money and effort down the track. This includes ensuring that you put in place the best structure for your business needs and have a well thought out business plan. For more tips on what you should consider when starting a business and how to go about it, read our article here.
Constitution
Company constitutions are simple, (mostly) standard documents which govern how a company is run. If a company does not have a constitution, then the default rules in the Companies Act 1993 (Act) apply. Whilst customised constitutions are not required under the Act, having one in place can allow your company to do certain things that it cannot otherwise do under the Act. For example, a company may only indemnify directors or take out directors’ and officers’ liability insurance if its constitution expressly allows it. Certain provisions in the Act can also be modified by the constitution. With a little time and money spent wisely now, you could put a constitution in place for your company and take advantage of certain provisions of the Act. Constitutions are public documents and are lodged with the New Zealand Companies Office Register.
Shareholders’ agreement
A shareholders’ agreement is an essential investment for a company and its shareholders. If you are going into business with others, or investing in a business, it is important that you have clearly agreed how the business will be run and how the shareholders can (or when they may be required to) exit their investment. A shareholders’ agreement aims to provide certainty and save cost in resolving disputes which may arise between shareholders. It also provides shareholders with an opportunity to privately address and record any expectations, rights and obligations that shareholders want enforced. Unlike constitutions, these documents can remain as confidential corporate documents, so do not need to be lodged with the New Zealand Companies Office Register.
The true value of a shareholders’ agreement is realised when and if the shareholders come into dispute (whether over business matters or their shareholding). Even the best of friends or family cannot guarantee they will always remain aligned in their visions for the business or their own personal interests as shareholders. We would always recommend that a shareholders’ agreement is negotiated and put in place as early as possible and while all parties are communicating well. For further information on why a shareholders’ agreement can be valuable, read our article here.
Privacy policy
If your business collects personal information from your customers (i.e. through sales, newsletters or subscriptions) then you will be subject to the Privacy Act 1993. Having a good privacy policy informs customers that you take the collection of their personal information seriously. It also helps show that you can be trusted in dealing with their personal information and that you have proper procedures in place to handle their personal information. A privacy policy sets out, among other things, what purposes you will use the personal information for, any third parties the personal information is disclosed to, and how customers can amend/update their personal information.
With the Privacy Bill proposed to come into effect on 1 March 2020, now is a good time to check that you are complying with current requirements and to get ready for the changes the Bill proposes, such as mandatory reporting of privacy breaches. You can read our latest article on the Privacy Bill, here.
Brand protection
Whether you are developing a new business brand or have a well established brand in the market place, it is important that you have appropriate brand protection to ensure that others cannot trade under a brand that is the same or similar to what you have created or purchased. In particular, if you use a particular trade mark (such as a business name or logo), then registering it with the New Zealand Intellectual Property Office will add value to your business by giving you the exclusive right to use that brand in New Zealand for your particular goods and services.
For information on our free IP audit service which can help you to identify the appropriate protection measures for your business, please see here.
Terms and conditions
Terms and conditions (T&Cs) play a crucial role in outlining the rights and obligations under a contract for goods and/or services between supplier and customer. T&Cs are fundamental to a customer/purchaser and supplier/provider relationship so that you know what you are getting or giving (as the case may be) and on what terms you are doing so. They also become the critical reference point if something does go wrong or there is a dispute. Well drafted T&Cs will provide a clear process setting out:
- How goods are repaired or replaced;
- How services are made good if not performed to the required standard;
- Who is liable for what under the T&Cs (and any limitations or exclusions of liability); and
- If a dispute arises, how it will be dealt with between the parties.
If you would like to understand more about T&Cs and why your business should have them, read our article on their importance, here.
It is important to note that the scope of the unfair contract terms legislation is proposed to shortly expand to cover not only standard form contracts with consumers, but also business to business contracts with a value of up to $250,000. For more information refer here.
If you would like any assistance with any of the above or would like some further advice about what you may be considering for your business specifically, please contact Lane Neave’s Business Law Team.
Business Law team
Gerard Dale, Claire Evans, Graeme Crombie, Evelyn Jones, Anna Ryan, Joelle Grace, Peter Orpin, Ellen Sewell, Matt Tolan, Carlo Wan, Kristina Sutherland, Jacob Nutt, Whitney Moore, Alex Stone, Ben Cooper
Click here for other Corporate Law articles.
