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September 9, 2010 at 9:24 am #969817Up::0
Hi guys,
This is my first post however I have been sponging alot of info off this site over the past few months. Hopefully I’ll be able to return the favour in the near future.
I am currently in the final stages of designing my company structure (new start up) and am a little stuck on which will be the best way to go.
The business will entail three partners (myself, my partner and an investor). The company will be set up as a PTY LTD. Because we haven’t signed with an investor as yet, I am unsure of how hard it is to modify the shareholders of the business after it has been registered.
What we are planning on doing is registering the company under both of our names, and then adding the investor once everything is finalised. I would like to begin trademarking and IP protection before we sign the investor.
Is this a complicated/expensive process? I have investigated to some degree but the finer points are still alluding me.
Thanks for your imput in advance.
Gav
September 9, 2010 at 11:45 am #1041073AnonymousGuest- Total posts: 11,464
Up::0Hi Gav,
Welcome to Flying Solo.
Interesting question. I’ll be interested to read whatever advice you receive from the brains trust around here.
Good luck for your new venture.
JayneSeptember 9, 2010 at 9:06 pm #1041074Up::0Thanks Jayne,
I am meeting with my accountant in two weeks time, but I always like going into those sort of meetings knowing what I’m talking about!
Gav
September 9, 2010 at 11:06 pm #1041075Up::0Hello Gav,
Adding or removing shareholders is not a big issue or cost – for me what is critical is a shareholders agreement which details this and all the other issues which generally come up during a company’s existence, from inception to dissolution and typical events where more than one person has to agree on things. I’ve seen a few cases of things getting really tricky (sometimes very nasty) when these weren’t in place.
I’d add that to your list of questions and these are also best done by a lawyer that has experience in this area.
September 10, 2010 at 7:11 am #1041076Up::0Thanks Harry,
The shareholders agreement was on the list to do, but I’m lad to hear that altering the shareholder structure isn’t going to be a of big deal.
Gav
September 10, 2010 at 9:52 am #1041077Up::0Some addiotional comments for you.
There is no issue incorporating the getting everything setup and then adding a new or varied shareholders agreement later on. A new arms length investor will likely have certain specific requirements that have not been included in either your base constitution or your initial shareholders agreement.
Also make sure that the new investor pays a price for their shares (if it’s an allotment) that’s at least equal to market value. Try to avoid using a completely arbitrary basis for calculating this. Discounts on market value may effect or trigger (a) cgt value shifting taxation and / or (b) employee share scheme taxation.
Finally and as strange as this may sound, don’t waste too much money on advisors, lawyers and accountants fees. Funds are a precious commodity so be sure to put it to best use. The same goes for IP spend. No suggesting by any means that you neglect the basics but keep it in mind.
Helping build better businesses and better lives with expert financial and taxation advice. info@360partners.com.au www.360partners.com.au 03 9005 4900September 10, 2010 at 8:32 pm #1041078Up::0Hi Gav,
It seems your questions about the Pty Ltd have been answered so I wont repeat all of that – except to say that as to your price question, companry registrations are really quite cheap – you can get a constitution, and all your company documents + ASIC registration fee for under $1k including advice on how best to put it all together (of course prices may increase depending on the extent of the advice needed!). And to agree with the documentation points – its really important to get shareholders agreements and funding agreements agreed on from the start. They also help you to focus on a whole range of important issues that you and your partner/s may not think of without a document/checklist to trigger it.
The other thing to keep in mind, as you rightly point out, are trademarks and IP. Your registration of a company name doesnt prevent someone else from registering something similar. And trademark registration is a first in first served type process. I have had so so many instances of clients (who have used a trademark for years) coming to me to get their mark registered, only to find that a newer competitor on the scene is now using the mark (and at times has even got in and registered it first). Which doesnt at all make their trademark registration impossible, or mean that they have no rights against the newer competitor if that competitor was breaching their rights, but from a practical perspective it makes both of those things much harder, more time consuming and expensive. So if you have a great name/brand/mark, you dont necessarily have to run off and register it immediately, but I would certainly put it somewhere near the top of the list as something to look at when funds are available. Its also worth bearing in mind that the full trademark process takes a minimum of 7ish months. Let me know if you want more information, I have a have a number of info sheets that i can send you on how the process works and those sorts of things.
Best of luck with it!
Joanna
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