31/10/2012

When you own and run a business with others, whether as shareholders of a company, partners in a partnership or unitholders in a unit trust, it is very much like a marriage.  If these co-owned businesses don’t work out, it’s better to have in place a well-prepared joint ownership agreement than to have to resort to a divorce lawyer!

Joint ownership agreements take various forms depending on the structure of your business.  Regardless of the structure of your jointly owned business, joint ownership agreements must set out:

•    how the parties will enter the relationship
•    what each party will contribute
•    how the jointly owned business will be run day-to-day
•    how the profits of the business will be divided and when
•    how decisions affecting the business will be made
•    how the parties will get out of the relationship
•    what will happen in the event of the death or disability of an owner (so-called ‘buy sell arrangements’)
•    how disputes will be resolved

Joint owners don’t need their agreement with them every working moment of the day.  The joint ownership agreement is simply there to provide a rule book for when the owners don’t agree on how some aspect of the business is to be administered.

Choose carefully! You should take no less care in choosing your business partner than you would in choosing your marriage partner.  Although your joint ownership agreement will help you regulate your relationship, it is no substitute for trust and respect for your co-owner. Liking them is a big help also!

For help in negotiating and drafting a joint ownership please contact Gareth Johnson or Peter Townsend here at TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222.