Category: Business Law

  • What is Alternative Business Structure (ABS)?

    What is Alternative Business Structure (ABS)?

    What is Alternative Business Structure (ABS)? They what help to do; An alternative business structure could be a firm that has non-lawyers in its possession and management structure; this enables corporations to involve key those who bring further expertise and skills. The non-lawyer is often concerned through investment or as a partner or director.

    Here is the article to explain, What is Alternative Business Structure (ABS)?

    Before 2007, once the Legal Services Act stood passed, any thus solicitor doing business in a very legal capability for the general public had to try and do so in a very firm that solicitors in hand. Once the act stood passed, they came onto the scene and allowed each non-solicitors and solicitor to have legal service corporations. If you have obtained their license, you’ll offer legal services as a non-legal organization; this enables law corporations to manage by non-lawyers. ABS structures conjointly permit law corporations to supply over simply legal services. Law corporations created as ABS will have outside investors, which is one of the most important attracts of this feature.

    Introduction to Alternative Business Structures (ABS);

    Alternative Business Structures (ABS) has had and will continue to have, transformational implications in delivering legal services. ABSs entered the UK’s legal landscape through the Legal Services Act 2007 and officially began operating on 6 October 2011. In essence, ABSs have diluted ownership restrictions in favor of non-lawyers, allowing both non-lawyers and lawyers to manage the law firm business. This has similarly brought new entrants to the market and more external investment. This paper will critically assess the transformational impact ABSs have had in delivering legal services, examining both their positive and negative consequences. A case study will then undertake, with national law firm Irwin Mitchell’s decision to operate as an ABS discussed. What they are helping to do below are;

    An ABS performance will work where:

    • An established lawyer-owned firm needs to require a non-lawyer partner.
    • An established house needs its non-lawyer to follow the manager to become a co-owner.
    • A professional person needs to line up a house with a non-lawyer partner/owner, and.
    • A non-legal enterprise sees legal services as complementary and sets up a standalone business.

    Time for a change;

    As Nick Hood has noted:

    “When the Legal Services Act 2007 was enacted, it’s doubtful that its sponsors could have foreseen a Cyprus-based construction consulting firm embracing the concept to enhance its international credibility. Nor would they have anticipated it bringing together Bucks County Council & the Bucks Fire Authority as law services providers.”

    And indeed, it has been an era of considerable change. This transformation has seen businesses as diverse as trucking giant Stobarts entering the legal market, stands licensed to set up a firm of solicitors under ‘One Legal Ltd’. For the Stobart Group, which already owns a claims management company, an insurance broker, and Stobart Barristers; this means they can effectively operate as a ‘one-stop shop’. As the Legal Director of the Stobart Group noted:

    “[Stobart] can broker the insurance, then handle the claim, deal with the litigation, and provide an advocate”.

    Report;

    But of course, any evaluation of ABS’s must consider the underlying reason why they existed introduced. A 2001 Office of Fair Trading (OFT) report entitled ‘Competition in Professions’ provides the answer. This report formed the basis for a subsequent White Paper entitled ‘The Future of Legal Services’; itself leading to the Legal Services Act 2007 mentioned earlier. The 2001 OFT report provided that:

    “Markets generally work best for consumers when there is unrestricted competition between existing suppliers and unrestricted potential competition from new suppliers and new forms of supply.”

    As such, the chief reason ABSs existed introduced was to increase competition between existing ‘traditional’ law firm suppliers and encourage the introduction of new suppliers; both to benefit consumers in the forms of a greater degree of choice, potentially higher quality of service, and potentially a lower cost. Further, with new entrants to the market has come much external investment; “such as private equity or venture capital, to inject into legal businesses by outside investors”.

    Example;

    A well-publicized example of the colossal amounts of money existing injected into legal businesses by outside investors is that of private equity firm Duke Street Capital and national professional services firm Parabis Group. Duke Street Capital, which already invested £200 million into Parabis Group, invested a further £13 million in December 2014 to help fund the Group’s development of its ABS models. Parabis Group’s ABSs include Plexus Law, Cogent Law, Acumen, Casus Legal, and Greenwoods Solicitors.

    Speaking of the impact of the numerous ABS licenses existing issued and to the extremely wide range of recipient businesses, Stephen Mayson has provided that:

    “To pretend that these developments don’t matter, or won’t make any difference to the buying of legal services, is plain nonsense… This is not the time to resist, deny or challenge; it is time to reinvent the delivery of legal services. Not just changing a few of the moving parts, but fundamentally re-thinking what lawyers and law firms do”

    A word of warning;

    Evaluating Mayson’s comments; “undeniably, ABSs offer new ways of working for the lawyers who embrace them and new ways of accessing legal advice for the clients who choose them”. However, such developments and quest for reinvention mustn’t ride roughshod over professional ethics and principles. With non-lawyer owners and external investment comes the introduction of commercial norms, primarily the pursuit of profit above all else. Lord Neuberger has expressed concern over this issue, and speaking to the Association of Liberal Lawyers, stated that:

    “Such a professional ethos cannot assume to be in the forefront of the minds of hard-nosed businessmen who want to maximize a return on their investment… An external investor in a legal business may well want the firm only to carry out the most remunerative work.”

    Merits;

    There is merit in his Lordship’s concerns. Although it would be too naïve to suggest that commercial factors have not entered the law; they have existed tempered by practitioners’ professional obligations, towards both clients and the court. However, one can readily envisage legal practitioners operating in an ABS existing subjected to ethical challenges; which play off the obligations mentioned above with their obligations towards their external owners.

    As an indicative example, in the motor claims insurance sector, RBS roughly retains around a 30% market share. If RBS had 40% ownership of one particular ABS, a client, pursuing an insurance claim; may well find their solicitor is standing employed by the company who will have to ultimately pay out their claim.

    As Lord Neuberger rightly, and further notes:

    “The regulatory bodies will need to work hard to ensure that such pressures are minimized and neutralized. If they fail to do so and allow a culture of conflict to arise and one where that conflict is quietly resolved in the investors’ favor, we run the risk of losing a properly robust and independent legal profession.”

    However, opposing this view, one must also recognize the great benefits that ruthless commerciality can bring the legal profession.

    Research;

    Indeed, very recent research published by the Legal Services Board in July 2015 shows that solicitors practicing in newly created ABS firms:

    “Have higher levels of innovative activity of all types than other Solicitors. This is consistent with ABS Solicitors’ higher level of investment, staff engagement, and external involvement in innovation … ABS Solicitors are … more likely to introduce new legal services, with potential benefits for service users. They are also more likely to engage in strategic and organizational innovation.”

    The findings of the research are perhaps not that astonishing given “the mood music [that ABSs] have created, encouraging innovation and change”. Asides from an innate commerciality and access capital to invest, from a real, practical perspective; ABSs also have the added advantage over their ‘traditional’ law firm competitors in being able to establish; their own bespoke IT systems, often from scratch, rather than inheriting or having to make do with out-dated systems that are no longer fit for purpose.

    The advantages are obvious and numerous, including, for example, better communication between staff, improved service delivered to the customer, and more effective case management. Additionally, not existing confined to the “antediluvian working practices and petty partnership politics”; which have sadly characterized many ‘traditional’ law firms results in opportunities for ABSs to develop attractive, novel alternatives; working patterns, and remuneration packages developed in the commercial arena.

    But, unfortunately, as Hood notes:

    “One inescapable downside of bringing hard-headed commercial business attitudes and financial discipline to the cozy, coddled legal world is that investors will walk away from failing ventures without a trace of sentiment.”

    Case study – Irwin Mitchell;

    Irwin Mitchell was one of the first law firms to license by the SRA as an ABS. It has multiple licenses which cover a wide range of its business operations and indeed, most recently, has entered into a joint venture with insurer ensure and will form an ABS accordingly. Below, the reasons why Irwin Mitchell decided to apply for ABS status exist discussed; and the transformational impact it has had in delivering its legal services considered. This will ultimately explain why, as one of Irwin Mitchell’s practitioners has exclaimed, “becoming an ABS was right”.

    As Irwin Mitchell’s Chief Executive John Pickering has provided:

    “We decided that we wanted to become an alternative business structure because it would better suit our ability to grow our business and if need be and if we wanted to bring in external investment. It would also help fit with the development of our legal and related services,”

    Two chief factors can derive from Pickering’s comments, business growth, and external investment. Focusing on the first factor, business growth, how have Irwin Mitchell used the ABS model, to achieve business growth, and how has this transformed their delivery of legal services?

    According to Pickering, Irwin Mitchell sought “to restructure the business completely”. Achieving this, they eradicated strict delineations between practice areas; this being a defining feature of many ‘traditional’ law firms, and now operate through two practices, business legal services, and personal legal services. Each division stands headed by a separate chief executive. This move, Pickering notes, existed made “to be very client-focused and client-facing in terms of how we run the business”. This bold decision, it stands suggested, reflects commercial instinct; an instinct to streamline, drive down costs and simplify.

    Other things;

    Additionally, Irwin Mitchell took advantage of the diluted ownership restrictions to place non-lawyers in senior positions of ownership. Glyn Barker, former Vice-Chairman of PWC, and Mel Eggleston, Senior Partner at KPMG, existed made a chairman-designate and a Non-Executive Director, respectively. Accordingly, Irwin Mitchell was able to acquire the commercial insight and invaluable management expertise of two extremely experienced individuals; who were operating at the upper echelons of the ‘Big Four’. Vitally, they were able to put them in positions of real control and influence.

    In Pickering’s own words, such hires reflect Irwin Mitchell’s “clear intention to take advantage of the opportunities we think will arise from becoming an ABS”. Moreover, it is interesting to note that accountancy firms, KPMG and PWC themselves being perfect examples, have gone through transformations from small, standalone accountancy practices to fully-fledged, diverse professional services organizations, offering many business services. The recruiting of Barker and Eggleston by Irwin Mitchell; therefore, arguably reflects “an envious nod to the success of accounting firms in becoming proper businesses”.

    Ultimately, as a result of the changes Irwin Mitchell have made since becoming an ABS, and of course not existing confined to the traditional legal model, has resulted in what Pickering has provided is:

    “A much more cohesive way of delivering our business. The management structure which underpins this, the divisional structure with all of its machinations behind that, enables us to run the business in a much more efficient and organized way.”

    Merits or Pros or Advantages of Alternative Business Structure (ABS);

    Merits or Pros or Advantages of ABS for Consumers;

    There are many benefits to Alternative Business Structure (ABS) for the consumer. Someone looking for legal assistance who heads to an ABS-type firm will probably face lower legal costs. If a client needs help with a wide variety of things; they might be able to find all of the assistance they’re looking for in one place.

    Beginning your business as an ABS could be the decision that gives you the edge over your competitors. Clients will likely appreciate the convenience of various services offered; and, you’ll have the ability to grow with more possibilities for investors.

    Merits or Pros or Advantages of ABS for Law Firms;

    Law firms can help from choosing to form an ABS for their practice in several ways. As previously said, the ability for ABS firms to offer various services is a huge draw. A firm can market itself as an all-encompassing assistance provider in a particular area when they’re able to protect more bases.

    When a law enterprise forms as a typical business structure, like a skilled limited liability company or a corporate law firm, it must own by only lawful professionals. Corporate law firms may only have attorneys as investors. However, this is not the issue with ABS. Employees of the business who are not attorneys can own interest in the enterprise. This could lead to better worker retention and maybe even a better environment throughout the business.

    Demerit or Cons or Disadvantages of Alternative Business Structure (ABS);

    Demerit or Cons or Disadvantages of ABS for Consumers;

    Some believe that the likely drawbacks of Alternative Business Structure (ABS) are too much to choose this structure. But many don’t find these drawbacks to be disadvantageous. Some worry that more ABS firms will drive out smaller enterprises and lead to fewer choices for consumers.

    If a law firm stands business structure as an ABS; they could run into difficulty trying to expand or provide assistance overseas. Individual foreign nations do not yet accept ABS. This could be an issue for a client who wants to stick with a certain enterprise as they move overseas or travel.

    Demerit or Cons or Disadvantages of ABS for Law Firms;

    There are a few possible drawbacks that a law firm might face if they choose to form as an ABS. Some worry that, if a firm is run by non-attorneys, it is likely to have legal work handled by non-lawyers. This already happens in certain areas of the law. For example, much of the work involved in conveyance and deed of assignment matters manage by non-legal professionals. However, ABS companies reserved certain legal activities for only the lawful professionals employed there.

    Conclusion;

    In conclusion, Alternative Business Structure (ABS) has had a transformational impact in delivering legal services. Their introduction through the Legal Services Act 2007 and operation commencing 2011 has created much furor over how legal services are to offer to consumers. This paper has examined the impact ABSs have had in this regard. The change they have occasioned in the legal profession has been discussed; with the example of the Stobart Group being put forward along with the vast amounts of external investment which have poured in.

    In this respect, the role private equity houses are having cannot be understated, financing, in large part, businesses wishing to offer legal provision under an Alternative Business Structure (ABS) license. The various positives and negatives of ABSs’ introduction were then examined. Whilst commercial practice must not curtail solicitors’ professional obligations and principles, devaluing the legal profession in the process; the benefits such a commercial mentality can bring were put forward, primarily increased innovation which can benefit the consumer.

    Last, a case study was undertaken on Irwin Mitchell, the first top-20 UK law firm to operate as an ABS. This posited the reasons why its decision to become an ABS has transformed the way; it delivers its legal services, most notably, the significant restructuring of its practices into two clear divisions. In all, whilst there are right “no cookie-cutter ABSs”, as the Legal Services Board has conclusively found, Alternative Business Structure (ABS) has higher levels of innovation than; their ‘traditional’ law firm counterparts and, in turn, have had a related transformational impact on how legal services are delivered in the UK.

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    What is Alternative Business Structure (ABS)?
  • 4 Main Business Structure Attorney in Business Law

    4 Main Business Structure Attorney in Business Law

    What is the 4 main Attorney of Business Structure in Business Law? Under the Law Society Act and its by-laws; you’re allowable to line up your observation as a sole proprietorship, general partnership, limited liability partnership, or an expert corporation. The Law Society conjointly acknowledges 2 observed arrangements that involve non-licensees: multi-discipline practices and affiliations. The four main types of business structures within the U.S. embody Sole Proprietorship, Partnership, Limited Liability Company, and Corporation.

    Here is the article to explain, the 4 majors Attorney of Business Structure in Business Law!

    You’ve leaped to start your business firm. you have considered prices, observe areas, and tried and true all the things on your startup list; currently, you would like to work out a way to come upon your business. And not within the sense of “Where will the piece of furniture go?” No, currently you’ve got to create the massive call on the legal structure of your firm; this can be no tiny matter either. the selection you create can affect several aspects of your business operations; therefore it’s necessary to analyze your choices and build the correct selection for your desires and circumstances. therefore what are your options?

    Sole Proprietorship;

    Sole ownership is the simplest business structure and involves one individual WHO is answerable for the everyday operations of the business, an attorney lists. Also, from a tax perspective, the incomes and expenses of the business exist enclosed within the instrument of the owner.

    The business doesn’t need to file separate tax forms from the owner since the business doesn’t exist as a separate legal entity from its owner. The owner needs to file kind 1040, and also the kind should embody Schedule C and Schedule SE for self-employment tax.

    Some aspects of a sole proprietorship include:

    • You don’t need to file any forms with the state; although you continue to have to compelled to get any needed licenses and permits.
    • Owners are in person answerable for any debts incurred by the business.
    • Income from the business is according to your tax come back.

    According to the Small Business Administration (SBA), a number of the benefits of employing a sole ownership structure are that its low price, house owners have management, and taxes are simplified, whereas the disadvantages embody unlimited liability which you’ve got to pay self-employment taxes.

    Best Opinions;

    There are many benefits to choosing a sole ownership business structure. First, it’s cheap to start, and there exist the lowest fees incurred once registering sole ownership. In most states, the sole prices related to running sole ownership are business taxes and operational license fees.

    Business house owners may be eligible for tax deductions, like insurance; not like an indebtedness company, sole ownership doesn’t need to satisfy in progress necessities like stockholder conferences and vote or election of administrators. On the drawback, since it’s not a separate legal entity from its house owners; the house owners are in person answerable for the debts, liabilities, and obligations of the business.

    Partnership;

    A partnership may be a sort of business structure that contains 2 or additional house owners; it’s the only sort of business structure attorney for a business with 2 or additional house owners. A partnership shares loads of similarities with sole ownership; for instance, the business doesn’t exist as a separate legal entity from its house owners; and so, the house owners and also the entity exists treated in concert person.

    When filing taxes, the profits and losses of the business pass on to the partners, and every partner needs to report the data in kind 1065 with their tax returns. Also, partners need to pay self-employment tax, reckoning on their share of the enterprise’s profits. Schedule K-1, which records the profits or losses, ought to accompany kind 1065. LLPs could also restrict to bound professions, and supply some protection to the partner from personal liability for sure acts of the opposite partners.

    In a partnership:

    • Partners are in person answerable for the partnership’s obligations (in a general partnership);
    • Partners owe fiduciary duties to every other; and
    • Taxes paid through the partner’s tax returns.
    Best Opinions;

    The benefits of a partnership, says the Small Business Administration, embody low formation prices, profits that flow through to the partners, and incentives for workers to become partners; whereas the drawback includes joint and several other liabilities, shares, and disputes between partners over business selections.

    A partnership business structure offers many benefits. once registering a partnership, there’s very little work concerned; and also the partners aren’t needed to satisfy the constant level of necessities that indebtedness corporations are subjected to. Also, partnerships get pleasure from a special taxation arrangement; wherever partners needed to report their share of profit or loss of the business on their tax come back.

    On the drawback, the partners are in person answerable for the debts and obligations of the business; and their assets stand sold off to pay the business debts. Also, disagreements might occur between the partners and this might bog down the operations of the business.

    Corporation;

    A corporation may be a kind of business structure attorney that offers the entity a separate legal entity from its house owners; it’s advanced and pricy to line up, and it needs the house owners to accommodate additional tax necessities and rules. Most firms rent attorneys to manage the registration method and to make sure that the entity complies with the state laws wherever it’s registered.

    When a corporation intends to travel public through the difficulty of common shares to the general public; it should 1st exist incorporated as a company; firms stand needed to pay each federal and state taxes; whereas the shareholders need to disclose their dividend payments once filing their financial gain taxes; a company exists treated as a novel entity with indebtedness and perpetual existence that’s owned by shareholders.

    Of note regarding corporations:

    • You must file work with the state.
    • You must prepare bylaws that govern the function of the corporation.
    • The corporation should observe bound company formalities.

    A corporation exists taxed once the corporation earns profits, and also the dividends distributed to shareholders exist taxed. If the corporation meets bound necessities, it will elect to live treated as associate “S Corporation” such financial gain and losses labor under to the shareholders.

    Best Opinions;

    The main varieties of firms are C-corporation and S-corporation. A C-corporation exists as a separate legal entity from its house owners; whereas an associate S-corporation might incorporate up to a hundred shareholders and functions within the same manner as a partnership.

    One of the benefits of a company structure is the ability to boost capital. The entity will raise massive amounts of capital by mercantilism shares of stock to the general public. Also, the business structure comes with restricted personal liability, providing the house owners protection against debts, liabilities, and obligations of the business. On the drawback, a company is subject to additional necessities, like meeting, voting, and also the election of administrators, and it’s dearer to create compared to sole ownership or partnership.

    Limited Liability Company (LLC);

    A Limited Liability Company (LLC) may be a hybrid business structure that mixes the simplest of each world, i.e., it possesses the characteristics of each partnership and firm. It provides personal liability protection to business house owners while reducing tax and business necessities. The profits and losses of the business are skillful to the house owners, and every business owner needed to incorporate a share of the profits/losses in their tax returns.

    Also, not like associate S-corporation, which is subject to a limit of a hundred shareholders, there’s no limit to the number of shareholders in an exceedingly indebted company. once registering a Limited Liability Company, the entity should file its articles of association with the Secretary of State wherever it intends to try to do business. In some states, the entity could also need to file an associate operational agreement.

    A limited Liability Company (LLC) may be a business whose members exist protected against personal liability for the acts and debts of the corporate within the same manner as a company however will value more highly to exist taxed as a partnership.

    For indebtedness companies:

    • Members should file organization papers with the state.
    • An operational agreement governs the rights and responsibilities of the members and the way the business is run.
    • The LLC will prefer to taxed as either a partnership or a company.

    The Small Business Administration notes that LLCs offer the advantages of indebtedness and less record-keeping than firms; however, members might need to influence dissolution if a member leaves or dies, though the operating agreement exists written to handle this example.

    Best Opinions;

    One of the benefits of fitting an indebtedness company is that it comes with fewer necessities compared to a company. Less work is concerned, and also the house owners get pleasure from indebtedness; which protects their assets from existing sold to pay liabilities of the entity. An indebtedness company isn’t subject to any limitation on the number of shareholders it will appoint.

    On the drawback, a Limited Liability Company is pricey to line up since it should register with the state wherever it intends to conduct operations. Also, the entity might have to rent an associate businessperson associated with a professional to make sure that it complies with tax and restrictive necessities.

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    4 Main Business Structure Attorney in Business Law
  • What are the Types of Business Structure in Business Law?

    What are the Types of Business Structure in Business Law?

    Business Structure Types in Business Law; What is Business Structure? It refers to the legal structure of a company that’s recognized during a given jurisdiction. associate degree organization’s legal structure could be a key determinant of the activities that it will undertake, like raising capital, responsibility for obligations of the business, furthermore because of the quantity of taxes that the organization owes to tax agencies. Before selecting the kind of legal structure, business house owners ought to initial contemplate their desires and goals and perceive the options of every business structure with their types.

    Here is the article to explain, What are the Types of Business Structure in Business Law?

    First of all, there are four types of business structures to consider when starting a T-shirt manufacturing business including Sole Proprietorships, Partnerships, corporations, and Trust. To determine what business structure types are best operatable under such conditions, each type of structure shall examine carefully.

    Types of Business Structure;

    Firstly, the sole trader as the only operator of the business has one important downside and that is the owner of the business has unlimited liability over everything. It is a generally good choice for a very small business but not for a T-shirt manufacturing business which will properly employ a great number of workers.

    Secondly, a partnership rarely works well in a business structure and friendship may not survive a partnership, the reason behind it is that people are generally self-service. Moreover, there are other disadvantages of partnership including:

    • It is not a separate legal entity, which means the individual has unlimited liability. Partners’ possessions could be lost if the business goes bankrupt.
    • The profits have to share among all the partners even though not every partner contributed equally.
    • One might not have as much control over the business because every partner has equal authority in the management and decision-making process.
    • Disagreements between the partners can cause major difficulties as partners are bound by one single partner’s commitments.

    Thirdly, setting up a business in a structure of the trust is a great way of preserving company assets and avoiding liability. However, due to its complex business structure, it would be quite difficult for one to manage their business. Also, such a setup might not hold proper moral, ethical standards for business practices.

    In my humble opinion, a mixture of trust and company is the best way. A company is a separate legal entity that limits the liability of shareholders. A trust allows the owner of the company to set up an offshore company to protect the company’s assets. Hence, a mixture of trust and corporation structure is the best way to manage resources and reduce the risk for the benefit of the company and its investors.

    Set up;

    A company would set up and then goes public, for the company to grow and make more money, shares will stand made available for the public to trade. Therefore, as the owner of the company, I can float as many shares as the company requires. Another company would stand incorporated as a trusted company under the Panama Companies to hold all assets of the dummy company.

    Then, my business partners would appoint me as manager of development who is in control of the T-shirt manufacturer production process. This way he could feel like has contributed but does not have total control over the company. On the other hand, I will be posing as a potential investor of the business thus becoming the shadows director of the company. Therefore, the company would follow the directions or instructions that I made. However, if anything goes wrong, hopefully, I can simply exclude myself from the company.

    Separate Legal entity;

    The principle from the Salomon v Salomon & Co Ltd (1897) AC 22 is very simple – a company is a separate legal entity and thus a juristic “person” in the eye of the law. Under the separate entity concept, the corporation exists treated as an artificial being; therefore, it has to manage by people in different capacities such as directors or managers.

    It takes its responsibilities itself; owners are free from their liabilities and owners hold limited personal liability. A shareholder’s financial liability for the company stands limited to a fixed sum; which indicates that a shareholder in a limited company is not personally liable for any of the debts of the company; other than for the value of his investment in that company.

    The duties of the shareholders;

    In general, the corporate world believes shareholders have no fiduciary duties to a company because they merely invest in a company passively. A shareholder holding the majority of stock in a company usually has total control over leadership and decisions.

    The duties of the managers;

    The duties of a manager are many and include:

    • Ensure that procedures are being followed
    • Track schedules and budgets
    • Moralize the team and Set priorities
    • Plan and decide what gets done and when
    • Hire and fire team members

    The duties of the directors;

    Directors have several common law and statutory duties and obligations such as:

    • Duty to act in good faith in the best interests of the company (replaces duty to act honestly)
    • Duty to act with care and diligence
    • Prohibition against the misuse of information obtained by directors
    • Duty to avoid a conflict in the position of a director or any interest that a director may have
    • Duty to prevent insolvent trading

    All In all, my friend as the manager of development will have limited control of the company. To protect the company’s assets and ideas, another company will stand set up in Panama as an offshore trust. Most of the company’s assets will transfer to my lawyer who is the company’s trustee. To minimize the damage when a business stands deemed unable to pay its debts; the creator of the trust has the power to revoke the trust at any time.

    Property;

    In the initial stage of setting up a business, ideal, invention, and trademark would be our business’s major assets. Therefore, it is essential to protect Intellectual Property. Anyway, one of our engineers has come up with an idea to manufacture a T-shirt; which will generate power when in contact with human skins. It is also capable of making sounds and acts as an alarm clock when timers exist set. The name of the business is “Ink-shirt” which stands protected by Business Names Act 1962 (NSW). To set up this business, registration of a business name and trademark can ensure one has exclusive use of the business name.

    The copyright is concerned with exclusive rights concerning the doing the prescribed acts regarding works of a musical or literary. The copyright in certain works and other subject-matter exists regulated solely by the Copyright Act 1968 (Cth). Copyright stands meant to protect original creative works, only actual works themselves can exist copyrighted, not the methods used to create them. A breach of copyright will stand committed by the person; who without authority reproduces the work in which the plaintiff has copyright.

    As the owner of the copyright has the extent power to prevent acts of infringement. The designs act protects all designs which are features of shape, configuration, pattern, or ornamentation applicable to an article, being features that, in the finished article, can stand judged by the eye, but does not include a method or principle of construction. To register it at the Designs Office, it will require the product to be new and original. A prescribed procedure includes the lodgement of representations of the T-shirt.

    Upon lodgement, a statement of novelty stands also required. Patents take two forms, standard and innovation patents. They exist a documented set of specifications for the invention. Application for a standard patent by the inventor is to exist made under the provisions in the Act. Specifications for the invention also require an application to stand filed at the relevant patent office. Moreover, a patent application must include one or more claims defining the invention; which must be new, non-obvious, useful, or industrially applicable. As the patent owner, monetary compensation can exist sought for past infringement; and seek an injunction prohibiting the defendant from engaging in future acts of infringement.

    Other things;

    The law considers a trademark to be a form of property. A registered trademark confers a bundle of exclusive rights upon the registered owner, including the right to exclusive use of the mark about the products for which it stands registered. A business may use a distinctive identification mark about their products; this mark has the potential to be a pivotal element in securing a business’s goodwill.

    Registration must exist made in the prescribed form and to exist examined by the Registrar. As most of the company’s assets exist registered as Intellectual Property assets. If someone breaches it without a valid license for the use of the specific intellectual property and fair use; they can exist sued in the name of the business to collect compensation for potential loss.

    To raise money on intellectual property, we have to get our invention into the marketplace. However, it is unlikely to turn it into a commercial product at first; but we can use this property as security to borrow money to fund the business. Another way to raise money for the T-shirt business is to have friends, family, or potential investors become part-owners instead of simply lending money.

    What are the Types of Business Structure in Business Law Image
    What are the Types of Business Structure in Business Law?