Solution

The trouble with the free partnership template was that it was completely the wrong business structure for the project. Our client and their collaborator intended to continue to operate their own practices and develop this product only as a side venture, which they could then both promote to add value for their clients.

Specific purpose ventures are much better created as a joint venture, whether a company is formed for that purpose or not. A partnership is more appropriate for a long-term whole of business collaboration because each of the partners becomes 100% responsible for the liabilities of the partnership; even if they weren’t involved in creating the obligation that gives rise to the liability.

We were able to create a joint venture agreement which clearly set out each party’s rights, obligations and entitlement to the product when the joint venture came to an end

Solution

What we discovered in reviewing our client’s business structure and documents was that they had mixed up entities, people and intentions so that the documents they had did not achieve their goals. Part of the problem arose from giving their two entities (one to hold intellectual property and one to trade with the public) similar names and mixed up references to the companies and each of the company ABNs in their documents, creating a lot of confusion. They had also prepared minutes of meetings that did not document the decisions made, identified the wrong parties (directors instead of shareholders) and identified the wrong companies. Their paper trail would not survive an audit and didn’t survive a look from a potential investor.

We were able to work with the client to fix their documents, conduct and properly minute the required meetings and ensure their details were properly recorded in ASIC. The investor then gave them the money they were hoping for.