Commercial

Capital Raising & Finance

Navigating Capital Raising: Legal Guidance and Advisory

Raising funds can unlock business opportunities. However, the difference between a successful raise and an unsuccessful one can come down to small details. We help you to get it right so that your business can get to the next level.

We provide assistance with:

capital raising (e.g. obtaining funds from third party investors); and
finance transactions (e.g. obtaining funds via loans or finance facility arrangements).

Capital raising is heavily regulated. The precise legal requirements can vary depending on your intentions, and there is often little opportunity to rectify mistakes. The competing tension between incoming investors and existing business owners can also create additional hurdles. With all of this in mind, a methodical approach to capital raising is a necessity.

Finance transactions similarly require a high degree of care. These arrangements have the capacity to create significant legal and commercial issues for borrowers and lenders alike. Whether the parties are family members, friends, investment funds or other third parties the importance of implementing them correctly remains.

Approach

Our usual approach is to:

provide you with a clear and transparent fee quote;
discuss your requirements, goals and desired outcomes;
analyse the potential pathways available; and
support you to implement your desired way forward.

Our priority is to ensure that your business obtains funds in a commercially sensible manner without exposing you to an unpalatable level of legal risk. We will be in your corner throughout the process advocating for your best interests.

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What happens to our current Shareholders Agreement / Unitholders Agreement when we restructure?

Most restructures will require a new co-ownership agreement to be prepared. This is because the business will likely be operated from a different entity because of the restructure. So, a business restructure is the perfect juncture to re-evaluate the suitability of your existing co-ownership agreement. For more information about these agreements, please click here.

Can you prepare legal documents to implement a restructure?

Yes, we regularly assist with the implementation of restructures. This includes not only preparing the legal documents necessary to implement a restructure, but also helping our clients to manage the other required deliverables (e.g. regulatory approvals, landlord consent, financier consent, dealing with registered security interests, transfer of employment arrangements, and other similar items).

Some of the legal documents that we commonly prepare include:

business sale contracts;
share sale agreements;
subscription agreements;
shareholders agreements;
leases; and
company resolutions.

What is the Small Business Restructure Rollover?

From 1 July 2016, rollover relief may be provided to small business entities (SBEs) and associated entities. A SBE restructure rollover may be available to an eligible entity when the following requirements are met:

genuine restructure – the transaction must be a genuine restructure. A special safe harbour rule may be available where there is no change in economic ownership of significant business assets (excluding trading stock) within 3 years of the restructure;
*SBE requirement *– the parties involved in the transaction must either be an SBE, connected with an SBE, in partnership with a SBE or an affiliate of an SBE;
ultimate economic ownership– the restructure must not materially change the ultimate economic ownership of the asset or the proportional shares of the ownership. Special rules apply to non-fixed trusts that are family trusts; and
*CGT active asset requirement *– the relevant asset must be an ‘active asset’.

What are the tax issues to consider when restructuring?

Tax consequences are a key consideration when restructuring. Tax consequences often inform both the decision about whether a restructure should take place, and also the best way of implementing the restructure.
Primary tax considerations in restructures include:

capital gains tax (CGT) – rollover relief may be available. For example, the small business restructure rollover or another CGT rollover;
Good and Services Tax (GST) – it is essential to ensure that no unintended GST consequences arise in the process of the restructure; and
duty – where land is involved, landholder duty and corporate reconstruction relief may be applicable.

How can Velocity Legal assist with a restructure?

We advise on all aspects of business restructures. This includes considering the possible ways in which a business restructure could occur, the tax consequences of the restructure, the legal documents (such as sale contracts) necessary to implement the restructure, and any engagement with the ATO that may be desired. We also work collaboratively with other professional advisors such as accountants and financial planners.

Why should I restructure?

A restructure may be beneficial for many reasons. For example:

to improve asset protection;
your business may have ‘outgrown’ its current structure;
to facilitate a family business succession;
to assist with a future business sale; or
to improve tax outcomes.

How do you charge?

Trust is one of our core values. We pride ourselves on not causing 'bill shock'. Our usual approach is to provide you with a clear and transparent fee quote to ensure that there are no surprises. You can then make an informed decision about whether you want to proceed or not.

Jess Hill

Jess Hill

Director

Greg Thomas

Greg Thomas

Director

Robert Osler

Robert Osler

Special Counsel

Lauren Gross

Lauren Gross

Senior Associate

Bryan Yeo

Bryan Yeo

Senior Associate

Edward Hart

Edward Hart

Associate

Natalie Nie

Natalie Nie

Law Graduate

Luke Shannan

Luke Shannan

Law Clerk