Want to know about your legal rights? Here’s a must read…

By Mullicka Rekhy

1. What are the legal requirements for purchasing a business in NSW?

In New South Wales, there are several legal requirements that must be fulfilled when purchasing a business. Firstly, the business name must be registered with the Australian Securities and Investments Commission (ASIC). Secondly, the business must hold all necessary licenses and permits required to operate in NSW. The buyer and seller must agree on the transfer of assets, and the lease agreement terms should be reviewed if the business operates from leased premises. The buyer must comply with the legal obligations under the Fair Work Act and any relevant awards, agreements or contracts that apply to employees of the business. Finally, a comprehensive due diligence of the business should be undertaken to assess its financial performance, assets and liabilities, contracts and agreements, legal and regulatory compliance, and any potential risks.

2. How do I ensure that I am not buying a business with undisclosed liabilities?

To ensure that you are not buying a business with undisclosed liabilities, it is essential to conduct a thorough due diligence of the business. The due diligence process should involve reviewing the business’s financial records, contracts, leases, employee records, and any other relevant documents. You should also conduct a review of any outstanding legal or regulatory issues that could create liabilities for the business. It is also important to include specific representations and warranties in the sale contract to protect the buyer from any undisclosed liabilities. The seller should provide representations and warranties regarding the business’s financial condition, legal compliance, and other relevant matters. The contract should also include indemnification provisions that provide the buyer with recourse in case of any breach of the representations and warranties. Engaging a solicitor experienced in business purchase transactions in NSW can help ensure that the due diligence process is conducted thoroughly and that the contract includes adequate protections for the buyer.

3. What kind of legal issues may arise during the business purchase process, and how can I mitigate them?

Several legal issues may arise during the business purchase process. Here are some examples of potential issues and how they can be mitigated:

Breach of Contract: The seller may breach the sale contract by failing to disclose important information or failing to comply with their obligations under the contract. To mitigate this, the contract should include specific representations and warranties and indemnification provisions to protect the buyer.

Disputes with Employees: Disputes with employees can arise if the new owner seeks to change terms and conditions of employment or redundancies. The new owner should comply with legal obligations under the Fair Work Act, relevant awards, agreements or contracts that apply to employees of the business.

Environmental and Health and Safety Issues: The business may have environmental or health and safety issues that can create liabilities for the buyer. To mitigate this, conduct a thorough due diligence of the business and seek appropriate warranties and indemnities in the sale contract.

Regulatory Compliance Issues: The business may have regulatory compliance issues, such as failure to obtain necessary licenses and permits or breaches of consumer law. To mitigate this, conduct a thorough due diligence of the business and seek appropriate warranties and indemnities in the sale contract.

It is important to seek the advice of a solicitor experienced in business purchase transactions in NSW to identify and mitigate potential legal issues during the business purchase process.

In conclusion, a solicitor experienced in business purchase transactions in NSW can provide legal guidance and help ensure that all statutory legal requirements are met, and that the buyer is protected throughout the purchase process. Every contract is unique, and it is important to obtain advice specific to the circumstances of the transaction. Contact us today for a quote on how we can assist you with our professional legal services.

Mullicka Rekhy is a Law Student and Aspiring Solicitor in NSW @ Lincoln Legal Pty Ltd.

For more information, contact:

0413201920