Risk management

Why use an IP License Deed?

Any forms of intellectual property (IP), whether they be trade marks, copyright or others, can be licensed for use by third parties. It is effectively renting them out, like an asset hire arrangement for physical assets. So why use an IP License Deed?

A licensing arrangement is advantageous to the holder of the IP as royalties, licensing fees or other forms of payment can generate revenue for the benefit of the holder of the IP, in addition to confirming that the IP remains held by the holder even though it may be used by the licensee.

Another common reason for the use of an IP License Deed is to aid in asset protection, such as where one entity may hold assets (such as IP) and another entity may trade (and hence incur liabilities and hold risk). The licensing arrangement means that the “at risk” entity that is using the IP can do so without putting the IP itself at risk. If the trading entity finds itself in financial difficulty or ends up in external administration or liquidation, then the license can be terminated and the IP returns to the control of the asset holding entity.

Licenses do not have to be written, but it is strongly recommended as it can prevent arguments and uncertainty.

License Agreements can cover things including:

  • term and territory
  • whether the use is exclusive or not
  • obligations when using the IP (eg, not to adversely affect the IP)
  • matters that result in termination
  • obligations on termination (such as return of all forms of IP and stop all further use)

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Business / Commercial Law / Dispute Resolution / Intellectual Property / Risk management  by 01 May 2024 0 comments

What is a Deed Poll?

In a previous article, we explained the difference between Deeds and Agreements however, there is a special type of Deed that does not require more than one party to sign it to make it legally binding (although it can also be made by more than one party, jointly).

That document is the Deed Poll. As soon as it is signed by the party that executes it, it becomes immediately operative and binding.

Deed Polls are solemn declarations, so they are commonly witnessed by lawyers, Justices of the Peace and notaries (but they requirements as to who can be witnesses and whether you need one can differ between States and Territories).

Deed Polls are used for various purposes such as:

  • part of the process of changing your name or gender
  • affirming your identity (such as where you may use more than one name)
  • declaring:
    • a promise to do not not to do something (including keeping information confidential)
    • the validity of a document or right
    • a fact or intention
  • releasing rights

The unilateral obligation/s created by a Deed Poll can be enforced by any person with whom the covenant in the document was made as against the party making it, so they ought not to be entered into lightly.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Business / Commercial Law / Dispute Resolution / Estate Planning / General / Litigation / Risk management / Uncategorized  by 01 Dec 2023 0 comments

Leasing business premises from a SMSF

Many business owners own the commercial or industrial premises that they use to operate their business from.  Often that property is owned by a Self-Managed Superannuation Fund (SMSF).

Leasing business premises from a SMSF is becoming commonplace. SMSFs can be a tax-effective way to create wealth and provide for your retirement, in addition to providing some asset protection benefits however, they come with a requirement to comply with the Superannuation Investments (Supervision) Act 1993 (Cth) (SIS Act) and its Regulations.

Additional obligations apply when the SMSF is using a limited recourse borrowing arrangement and bare trust when borrowing to acquire the premises and consideration ought to be given to who the members of the fund are and what happens if they were to pass away.

One of the leasing obligations on SMSF trustees in the SIS Act is that there be a written Lease in place. Not only does there need to be a Lease in place, but it must be at ‘arms length‘ and on commercial terms.  This effectively means that it must have all of the usual or typical terms that would be expected to be in place if the property was being rented to a third party, for example with market rent being required to be paid in full and on time, with no discounts.

Practically, there are other benefits of having a proper Lease in place and one of them is that on the sale of the business, the Lease can be assigned to the purchaser so that the SMSF continues to get the benefit of the Lease and its protections after you cease to run the business. It also can assist your SMSF to maintain the value of the premises as any purchaser of the land is bound by it, so having a good yield is important.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Business / Commercial Law / Dispute Resolution / Estate Planning / General / Property / Risk management / Superannuation  by 01 Oct 2023 0 comments

What is independent legal advice?

If you are:

  • borrowing money from a bank or someone else, like a parent,
  • have some special vulnerability in relation to a borrowing arrangement (such as due to age, inability to speak English well etc),
  • borrowing in relation to a self managed superannuation fund’s limited recourse borrowing arrangement, or
  • perhaps going guarantor on a loan for a company or a family member for their loan,

then chances are you will be asked to get “independent legal advice” from a solicitor in relation to the loan and the security for the borrowing or guarantee.

The document evidencing the loan is usually a:

  • Loan Agreement,
  • Letter of Offer or similar

and may have accompanying terms and conditions etc.

Security for a loan arrangement usually takes the form of a:

  • Mortgage,
  • Caveat or
  • Security Interest registered on the PPSR.

Independent advice us usually required by the lender so that it cannot (easily) be argued later that the borrower or guarantor didn’t understand the gravity of the arrangements being put in place – so although you get the advice, it is really for the lender’s protection.

In order to give independent legal advice, the lawyer will read the loan and security documents provided, advise you as to the meaning and effect of them and discuss any risks.

You will then be required to sign a document called a Declaration under oath confirming that you obtained independent legal advice before you freely and voluntarily signed the loan/guarantee/security documents.

Often the lender will also require the borrower or guarantor to obtain “independent financial advice” from a financial advisor, accountant or other appropriately qualified person. Lawyers, simply by virtue of their profession, possess no special skill to give financial (as distinct from legal) advice.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Asset Protection / Business / Commercial Law / Dispute Resolution / General / Litigation / Property / Risk management  by 01 Aug 2023 0 comments

Severing a joint tenancy

If you own real property with others, then it is either held as “joint tenants” or as “tenants in common“. For more information on the difference between both, please click here.

Assuming land is held jointly, on your death it will pass to the surviving joint tenant/s regardless of what you state in your Will. This is known as the “right of survivorship” and it operates because each joint owner of the property owns the whole of the land at the same time as the others, so the deceased owner simply drops off the title leaving the remaining joint tenants on title. This isn’t automatic as the land registry needs to have the details of the death to update the register, but it is a relatively simple process.

Joint tenancy may be a suitable scenario for a husband and wife where the survivor expects to retain the house however, generally joint tenancy is not suitable for investments as the investors would want their family or beneficiaries to inherit their interest in the property on their death, rather then their co-owners on title. From an estate planning perspective, tenants in common would generally be more sensible in this situation.

Property is sometimes incorrectly held as joint tenants because, for example:

  • people inherit property from their parents jointly with siblings, but they intend for their own children to inherit it on their deaths, rather than it staying with their surviving siblings;
  • sometimes purchasers just don’t understand the difference or don’t take advice at the time of acquiring a property (or the advice they got was wrong); or
  • they have divorced or separated and not taken any steps to separate their assets, update their property interests or estate planning arrangements

however, this is not a massive problem provided that they identify the issue and seek to rectify it without delay;

You can sever a joint tenancy. Severing a joint tenancy changes the nature of ownership so you and your co-owners own the land as tenants in common, which allows you to leave your share of the property to anyone in your Will (or if you don’t have a Will, under the laws of intestacy).

NSW Land Registry Services allows joint tenancies to be severed (converted to tenants in common) either unilaterally or with the consent of the other joint owners.

No stamp duty is payable in such a severance.

FURTHER INFORMATION

For further information in relation, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Business / Commercial Law / Dispute Resolution / Estate Planning / General / Property / Risk management  by 01 Jul 2023 0 comments

Statement of Wishes

A Statement of Wishes can be an important tool in your estate planning arrangements, in addition to a:

A Statement of Wishes (or Memorandum of Wishes) is an informal (not legally binding) document that accompanies your Will (and is often kept with it, but doesn’t form part of it unless stated to) and gives to your executor or trustee important guidance on how you would like certain matters dealt with or attended to after your death, such as:

  • reasons for decisions made concerning your Will;
  • how you would like sentimental items distributed (assuming the Will allows this);
  • burial and organ donation suggestions (if not covered in the Will);
  • intentions regarding management of trusts and investments;
  • wishes regarding children’s care, maintenance and education;
  • locations of documents or keys to safes;
  • bank account and other relevant information, including assets a person owns or controls;
  • useful suggestions regarding businesses and their continued operation;
  • care for pets; and
  • passwords and login details for digital assets and various things including social media accounts and emails (noting that their terms of service may not strictly allow this).

It can be as detailed or broad in scope as you wish and can be updated as you need without necessarily having to change your Will, although the wording of your Will always takes priority or precedence over the Statement of Wishes.

A Statement of Wishes can be prepared at any time, although it is usually made at the time of making your Will or soon thereafter. You should review and amend it at regular intervals and when your family circumstances change.

It is usually a good idea to sign and date the Statement of Wishes and if it is intended that the Statement of Wishes be used as a Statement of Testamentary Intention or as evidence in any proceedings in relation to your estate such as for a family provision order under the Succession Act 2006 (NSW), then all facts, matters and circumstances referred to in it ought to be correct and you may want to put it in an Affidavit form acceptable to a Court.

Although executors and trustees may be obliged to provide a copy of a Will to certain persons and beneficiaries, they are not required to reveal the contents of a Statement of Wishes to a beneficiary.

Further, where a Statement of Wishes isn’t part of a Will, it isn’t filed with the Supreme Court and thus doesn’t become a public document like the Grant of Probate or a Grant of Letters of Administration with the Will Annexed and can remain confidential.

FURTHER INFORMATION

For further information please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Dispute Resolution / Estate Planning / General / Probate / Risk management  by 01 Feb 2023 0 comments

Are your employment contracts up to scratch?

All employers ought to have in place robust Employment Contracts for all employees, whether they are casual, part time, full time, interns, seasonal or fixed term and provide the appropriate information statement/s.

For those employers that have a template/base contract or for those that intend to update their contracts, say for example after a promotion, role change or pay increase, then this information is relevant for you.

The Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 among other things imposed:

  • a prohibition on pay secrecy clauses;
  • limits on the ability to use fixed-term contracts; and
  • changes to flexible working arrangement request processing.

Pay secrecy

Sensibly, most standard form employment contracts contain confidentiality provisions including clauses that prohibit employees from disclosing their remuneration to other employees or anyone other than professional advisors such as lawyers, financial advisors and accountants.

Those clauses are no longer allowed and are not binding and employees now have a workplace right to share information about their remuneration or employment terms as they see fit.

Employers need to remove such clauses from new contracts entered into after 06 December 2022. Penalties can apply for breaches.

Fixed term contracts

From 06 December 2023, all employees on fixed-term contract (or consecutive shorter fixed term contracts) exceeding 2 years duration (or where there is more than one renewal even if less than 2 years duration) will be treated as continuing contracts, unless they fall within one of the limited exceptions in the Act or in a Modern Award.

Such employees will be entitled to unfair dismissal rules as part time and full time employees are. Penalties can apply for breaches.

Flexible work arrangements

The Fair Work Act (FW Act) contains a right for certain employees (eg, over 55s, those with disabilities, carers of young children or dependents or those involved with family violence) to request flexible working arrangements. Employers are obliged to consider those requests, but may refuse requests on reasonable business grounds.

From 06 June 2023, if an employer refuses a request or ignores it for greater than 21 days, then the fair Work Commission can intervene, direct arbitration and even make orders.

Employment contracts or workplace policies should be updated to include as much information as possible about the nature of the role, essential requirements etc, so employees understand what areas of flexibility may be feasible and what requests will reasonably be refused.

Workplace policies

In addition to having up to date and relevant Employment Contracts, employers also should have in place appropriate Workplace Policies. These can apply to employees as well as contractors to a business.

These can cover other issues such as the extension of areas of discrimination and harassment in the FW Act so employers can reasonably argue that all reasonable steps have been taken by them to prevent the discrimination or harassment.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Business / Dispute Resolution / Employment / General / Risk management  by 01 Jan 2023 0 comments

Power of Attorney for minors

The Powers of Attorney Act 2003 (NSW) (Act) provides for a person to appoint another person as their attorney to make financial and contractual decisions on their behalf.

The Act does not require that the person granting the power be an adult. Children too can thus grant a power of attorney. This is not the case for appointing an enduring guardian, which can only be done by an adult.

The document granting a power of attorney is a prescribed form under the Act.

For adults, if they are suffering from any illness, have deteriorating health, are going overseas or interstate or just want peace of mind, appointing an attorney to assist you to manage your affairs is generally a good idea.

Often children get diagnosed with medical conditions that may progressively affect their mental faculties or ability to read/write, so it is good to know that they can too appoint an attorney (such as a parent) to manage their financial affairs when required.

The child appointing an attorney must however, demonstrate understanding of what they are doing and that they are making the appointment freely and voluntarily, so their age and maturity are a relevant factor.

TYPES OF POWER OF ATTORNEY

A general power of attorney does not require a solicitor’s certificate however, it ceases to be of effect if you lose mental capacity (like where you are in a coma or suffer from dementia or some other illness that affects cognitive ability).

An enduring power of attorney on the other hand continues to be effective if you were to suffer such an incapacity. For this reason, an enduring power of attorney must be explained to you and witnessed by a lawyer who will provide a certificate in the prescribed form. We usually recommend an enduring power of attorney so that if some event happened to you that affected your capacity, your attorney would still be able to assist you.

HOW DOES A POWER OF ATTORNEY OPERATE?

The person appointing an attorney (the principal) can choose when the power of attorney is to take effect. It can be restricted to only take effect if a registered medical practitioner certifies that the principal is of unsound mind, upon some other event, from a date the principal determines or, it can operate immediately (for convenience).

An attorney may not use the principal’s monies or assets for gifts or benefits to the attorney or third parties unless this is specifically authorised in the document granting the power of attorney.

Provided the principal remains of sound mind, they can revoke a power of attorney at any time by signing a form of revocation and providing the attorney with that revocation.

The New South Wales Civil & Administrative Tribunal (NCAT) can review or revoke a person’s appointment as a power of attorney and can make a financial management order appointing a new attorney (or attorneys) or by appoint a representative of the NSW Trustee & Guardian if it is considered that your attorney/s is/are not making appropriate decisions on your behalf.

NCAT can also appoint a guardian by making a guardianship order so that the person’s medical, accommodation and lifestyle needs can be met however this is often only needed for children over 16 as their parents can generally consent to treatment under that age.

FURTHER INFORMATION

For further information in relation to estate planning or powers of attorney or contracting with minors generally, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Asset Protection / Estate Planning / General / Risk management / Uncategorized  by 01 Dec 2022 0 comments

What is a Confidentiality Agreement?

A Confidentiality Agreement (also known as a Non-Disclosure Agreement or NDA) is a legal contract, which should be used when sensitive information needs to be shared between two parties. It helps to ensure that the person or organisation that gains access to sensitive information doesn’t disclose it to a third party. Often the agreement is in form of a Deed.

NDAs are often used:

  • to protect confidential information or trade secrets;
  • as a precursor document to intellectual property use (such as patents) or where contractors are to assist developing new products or ideas (such as a new App);
  • for parties to be able to disclose sensitive information such as in the due diligence stages of a possible business sale or asset sale; or
  • even as part of employment contracts where employees may used the protected information during their employment and only for the purposes of furthering the employer’s business.

The obligations in a Confidentiality Agreement can last for a specified period of time or can be indefinite in their operation. The Coca-Cola recipe, for example, has been kept secret for well over 100 years.

The document would generally state why the information is being shared (without actually disclosing the confidential information being protected!) and the measures to be taken to ensure it remains confidential and is not used for any reason other than the stated purpose.

Where both parties are disclosing information to each other, a two-way or mutual NDA can be used to protect both the disclosing parties.

Without a proper and enforceable agreement, the party receiving the information may be able to do whatever they like with it. That said, just because you have an agreement, doesn’t mean it will be followed. Confidentiality Agreements also often deal with the consequences of misuse or unauthorized disclosure.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Asset Protection / Business / Commercial Law / Dispute Resolution / Employment / Intellectual Property / Risk management  by 01 Oct 2022 0 comments

Personal Guarantees

A personal guarantee is a written promise by a person (guarantor) that if a third party doesn’t pay its debts to the party entitled to the benefit of the guarantee, then the guarantor will make those payments.

Personal guarantees are regularly given by directors and sometimes shareholders of companies to personally guarantee the payment of money or obligations on behalf of the company, but they are also given on behalf of other individuals such as children.

They can be essential security for small to medium businesses in their contractual dealings with customers as the guarantor is then personally liable to pay the debt, whereas without the guarantee, the company could enter into liquidation and the contracting entity would have to prove the debt in the liquidation and risk not getting any return at all.

Common examples of where personal guarantees are used are in relation to:

  • leases of real property by companies;
  • loans by banks to adult children when purchasing property;
  • company loans from banks; and
  • company applications for credit at other businesses.

Managing risk

Entering info a personal guarantee is risky. You are placing your own assets at risk for the benefit of another person or entity so you should get legal advice before entering into one as well as assessing the commercial or other merits of providing the guarantee at all.

Considerations to help limit the risk include:

  • capping the maximum amount of the guarantee or the term in respect of which the guarantee is valid for;
  • requiring the guarantee to be secondary only (and not create a primarily liability of the guarantor);
  • removing security provisions such as caveats;
  • not allowing any variation to the agreement between the beneficiary and the person/entity whose liabilities are being guaranteed without your notice or consent;
  • seeking to have the guarantee removed  at some point once the borrower can demonstrate their own capacity to repay the debt.

however, often the beneficiary of the guarantee will not agree to these changes.

Aiding enforceability

If you are seeking to rely on a personal guarantee in your business, then you ought to get it drafted by a lawyer however, some basic tips to aid in enforceability include:

  • obtain a copy of the guarantor’s identification documents to properly identify them;
  • conduct some due diligence on the guarantor’s financial standing/capacity to pay;
  • obtain actual security for the guarantee obligation;
  • ensure it is signed and witnessed by an independent adult

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Asset Protection / Business / Commercial Law / Debt Recovery / Dispute Resolution / General / Insolvency & Bankruptcy / Risk management  by 01 Sep 2022 0 comments
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