Compliance & Governance
Business Compliance & Governance – A shareholder and partnership agreement between two or more business owners governs how the business is run, determine voting rights within the organisation and provides direction for resolving possible disputes in the future.
- Exit Strategy
- Business Operation
- Director and Shareholder Duties
- Entry/Exit Provisions
- Succession Planning
- Preparing of Shareholder, Unit Holder, Partnership and Joint Venture Agreements
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Frequently Asked Questions
What are my obligations as a Director? – Can I be personally liable?
Historically, adopting a company structure provided security for directors against becoming personally liable for the actions of the company. However, over time these protections have been reduced, and company directors can be personally liable for numerous issues that arise through the actions of the company in which their position is held.
Directors carry obligations at law to perform their role in a certain way and to a certain standard. This includes the requirement to avoid a conflict of interests, a requirement to perform the role with due care and skill, and the requirement to ensure that the company does not trade whilst it is insolvent.
A failure to comply with these requirements can create a personal liability for directors. Often, in terms of companies through which small businesses are operated, these personal liabilities for the basis upon which liquidators seek to recover money on behalf of creditors of the company when that company has been wound up due to outstanding debts.
It is important from the outset that each director understands their responsibilities at law, and the implications that can flow to them personally where they fall short of the standards required. Duffy & Simon can assist you to understand these requirements, and assess allegations that you have fallen short of those standards.
I am a committee member of an association, what are my responsibilities?
As an officeholder (which includes a committee member) of an incorporated association (such as a local sporting club or an environmental group), you carry certain responsibilities both to the members of the association as well as at law. It is important that you understand and comply with those responsibilities when performing your role.
As an office holder, you must perform your role with due care and skill, and carry out your duties in good faith and in the best interest of the association. Additionally, you must not use your position for an improper purpose or for your own personal gain, and must avoid conflicts of interests in your role.
Whilst on face value these obligations seem self-explanatory, when applied at a community organisation level, in our experience these responsibilities are not fully understood nor implemented. Failure to comply with these responsibilities can result in a committee member becoming personally liable.
Duffy & Simon can assist you to understand your role as a committee member, and provides associations with advice on governance and structure to avoid issues arising in the decision making process of the association.
What is a Shareholder’s Agreement, and do I need one?
When running a business, it is important to understand the obligations and entitlements of all of the business owners. A Shareholder’s Agreement sets out what each shareholder’s rights and obligations are, both to each other and also the company.
It will detail what is expected when things are going well, but also what will occur when one party wishes to exit the business or where there is a dispute amongst the owners. Without a Shareholder’s Agreement, it is difficult to establish these issues, and will make any future sale or dispute more complicated and more expensive to resolve.
What is a Unitholder’s Agreement, and do I need one?
When running a business, it is important to understand the obligations and entitlements of all the business owners. A unitholder’s agreement sets out what each unitholder’s rights and obligations are, both to the other unitholders and also the business operated by the unit trust.
It will detail what is expected when things are going well, but also what will occur when one party wishes to exit the business or where there is a dispute amongst the owners. Without a unitholder’s agreement, it is difficult to establish these issues, and will make any future sale or dispute more complicated and more expensive to resolve.