Are you compliant?

Legislation and regulations change throughout the year and these have an impact on your business. Perhaps your company took on more employees and has a higher turnover? These are excellent indicators of growth and success but they also have the potential to attract new legal obligations.

This article features a list of commonly overlooked legal issues you should review to ensure that your company is compliant going into 2016.

Corporate governance

Corporate governance rules apply to every company regardless of their size, and the Australian Securities Investment Commission (ASIC) will issue fines for failure to keep company records up to date. A fine may consist of a small ‘slap on the wrist’ or many hundreds of thousands of dollars for a significant breach.

Businesses should make sure all relevant documents have been lodged with ASIC, and the company register is complete. Consider whether your shareholders’ agreement and constitution still reflect the nature and structure of your company.

The end of the year is also a good time to follow up with your directors to make sure they have disclosed any new conflicts of interest and share trading activities in the course of the year.

It is also important to remember that ASX-listed companies are held to a much higher standard than privately owned corporations. ASIC imposes heavy penalties for failure to comply with listing requirements and disclosure obligations, not the least of which is to have your listing suspended.

Intellectual property

Many companies don’t begin with a trademark registration. They often mistakenly believe they are protected by the registration of a business name, or they are not yet ready to make an investment in intellectual property without any perceived value.

However, as your business grows it develops a reputation and builds brand recognition. It is important to review and carefully consider your intellectual property on a regular basis.  A small investment in a trademark can save time and money down the track.

If you already have registered intellectual property, a yearly (or even more regular) review of your registrations is always a good idea. Are any of your trademarks coming up for expiration? Have any of your logos evolved or changed?

It can be useful to keep a simple register of intellectual property that can save time and make it simple for staff to see at a glance what the company’s intellectual property is.

Privacy Principles

The Privacy Act 1998 was subject to some amendments during 2015, and as a result some of the Privacy Principles were updated. Your Privacy Policy should follow suit.

If your company experienced growth and reached an annual turnover of more than $3 million it will now trigger the Privacy Act. There are also legislative triggers for smaller businesses who deal with personal information or sensitive health and financial information.

Once you trigger the Privacy Act, your company will be required to have a Privacy Policy that complies with the Australian Privacy Principles. Review your company’s position and if in doubt seek some advice.

Finance arrangements

There is no one-size-fits-all finance solution, and companies often find that they ‘outgrow’ their finance arrangements, particularly during growth stages. When this happens facilities will need to be amended, updated and renegotiated.

It is also important to make sure you are complying with all of your obligations under your finance facilities, particularly in relation to any security you may have offered to secure loans.

Finance facilities often include guarantees for the payment of debts; however, guarantees often do not automatically terminate when the agreement they relate to terminates. They often need to be separately released. Take some time to review any and all guarantees your company may have granted and if necessary take steps to release any guarantee that may no longer be applicable.

Contracts

Standard form contracts are a valuable resource used by almost all companies, particularly in the form of standard supply agreements or terms and conditions.

It is important to remember that changes to legislation can result in clauses, or even entire contracts, to be deemed unenforceable or illegal. A good example of this is the recent changes to Australia’s consumer law, which make it unlawful to impose unfair contract terms. Being aware of what constitutes an unfair contract term is particularly important if you use standard term contracts which provide little or no occasion to negotiate.

Take some time to review your standard contracts. It is not only a good opportunity to make sure they are legally compliant, but to also consider whether they still reflect your current business practices.

Insurance

Even if you currently use a broker, an annual insurance health check is essential.

Have your assets increased? Is your insured value enough?

Are you aware of any circumstances of which you need to notify your insurance company?

Most insurance policies and even certain laws mandate a time limit within which you are required to report an insurable event. If the time limits are not complied with your insurer may be absolved from its liability under the policy, leaving your company uninsured.

Employees

Your employees should be reviewed at least monthly, but they belong on this list because they are one of the most important elements of every business and because they bring with them a host of legal obligations.

Some legislation, such as Occupational Health and Safety Laws, imposes not only significant financial penalties, but also personal criminal liability. Take some time to consider whether your Occupational Health and Safety Policy is both sufficient and effective. Review any training programs, particularly if you have apprentices, and make sure both you and your staff have all necessary licences or trade certificates.

Legal compliance doesn’t have to be complicated.

Spending a little time this month reviewing your contracts and refreshing your policies will allow you to focus on growth in 2016.

Top image credit: ©iStockphoto.com/Emrah Turudu

 

 

 

 

*Sarah Bartholomeusz is a CEO, senior lawyer and an author. Sarah founded You Legal, a new category of law firm providing top-tier corporate and commercial legal services and resourcing to growing companies. She has over 12 years’ experience as a lawyer. Sarah’s first book, ‘How to Avoid a Fall from Grace: Legal Lessons for Directors’, was published in 2015 and ranked as a #1 bestseller on Amazon.