Melbourne Commercial Lawyers

The most important legal decisions in an Australian business are often made before it opens or before a purchase: which structure to use, how contracts and leases are signed, how partners or shareholders can exit, and whether overseas funds need Foreign Investment Review Board (FIRB) approval. Once these are in place, changing them later usually costs more. Chua Tan Associates has practised in Melbourne since 1990 and advises sole traders, small business owners, overseas investors and family businesses in Mandarin, Cantonese or English.

Key points

• Common business structures are sole trader, partnership, company and trust, each with different liability, tax and administrative consequences.
• Anyone planning to become a company director must apply for a director ID before being appointed.
• A Victorian retail lease term, including options, must generally be at least five years, and the landlord must give the tenant a disclosure statement at least 14 days before entering into the lease.
• The new Franchising Code of Conduct started on 1 April 2025: franchisors must give the disclosure document at least 14 days before signing, and franchisees have a 14-day cooling-off period for new agreements.
• Most FIRB monetary thresholds are indexed on 1 January each year, and some investments, such as national security businesses, residential land and vacant commercial land, need approval regardless of value.
• Since 9 November 2023, proposing or relying on unfair terms in standard form consumer or small business contracts can attract penalties.

Choosing a structure: sole trader, partnership, company or trust?

A sole trader structure is simple and cheap to set up, but the owner is personally liable for all business debts. A partnership suits two or more people running a business together under the Partnership Act 1958; partners are generally jointly liable for partnership debts, so a written partnership agreement should cover contributions, profit shares and exit. A company is registered with ASIC under the Corporations Act 2001 and is a separate legal entity; shareholders' liability is generally limited to their investment, but directors have statutory duties and can be personally liable in some situations, such as trading while insolvent. A trust, often with a corporate trustee, is flexible for asset protection and distributions but more complex to establish and maintain, and must be run according to its trust deed.

The choice should also take into account tax, how easily investors can come in or the business can be sold later, how family members will be involved, and reporting requirements for overseas shareholders. We usually work with your accountant so the legal and tax sides are planned together.

Whatever the structure, a few basic steps usually come before opening: getting an Australian Business Number (ABN); registering a business name with ASIC if you will not trade under your own name; registering for GST once turnover reaches the threshold; and obtaining food, liquor or other licences from the council or relevant authority depending on the industry. For example, two friends opening a bubble tea shop together need not only to register a company, but also to deal with the shop lease, council food business registration, staff pay rates and a shareholders' agreement between them.

Buying or selling a business, and franchising

When buying or selling a business, such as a restaurant, shop, clinic or trading company, first decide whether it is an asset sale or a share sale. An asset sale usually transfers only agreed assets, while a share sale takes the company with its existing debts and contracts. Buyers should carry out due diligence: verify turnover and accounts, check whether the lease can be assigned, employee entitlements, whether equipment is subject to finance (searchable on the PPSR), and whether licences and permits can be transferred. The contract should include suitable conditions, warranties, a restraint of trade and handover arrangements.

Franchising is regulated by the Franchising Code of Conduct. The new Code started on 1 April 2025. Franchisors must give the disclosure document at least 14 days before the agreement is signed, and franchisees have a 14-day cooling-off period for new agreements. Before signing, review the fees, marketing fund, site and lease arrangements, renewal and termination terms, and speak with current or former franchisees about how the business really performs.

Shareholders' agreements and commercial contracts

Friends or relatives starting a company together often rely on trust alone. A shareholders' agreement can set out in advance capital contributions, director appointments, decisions requiring unanimous approval, dividend policy, transfer restrictions and pre-emptive rights, valuation when a shareholder leaves or dies, and how deadlocks are resolved. For example, if two 50% shareholders disagree because one wants to expand and the other wants to sell, without an agreement the only option may be court.

Everyday supply contracts, service agreements, distribution agreements and website terms should clearly address payment terms, limits of liability, intellectual property, confidentiality and dispute resolution. Under the Australian Consumer Law, unfair terms in standard form consumer or small business contracts can be void, and since 9 November 2023 proposing or relying on them can attract penalties, so businesses should review their templates regularly.

Commercial and retail leases

A shop lease is one of a business's largest long-term commitments. For retail leases covered by the Retail Leases Act 2003, the term including options must generally be at least five years, the landlord must give a disclosure statement at least 14 days before the lease is entered into, and a copy of the proposed lease and the Victorian Small Business Commission's information brochure must be provided when negotiations start. Before signing, check rent review methods, outgoings, fit-out and make-good obligations, personal guarantees, the bank guarantee amount, and whether the lease can be assigned if you sell. Retail lease disputes generally go to VSBC mediation first.

Employment basics

Employers must comply with the Fair Work Act 2009, including the National Employment Standards and any applicable modern award covering minimum wages, overtime and penalty rates, annual and personal leave, and notice. New employees should receive the Fair Work Information Statement. Written employment contracts, accurate payslips and time records are the foundation for avoiding underpayment claims and unfair dismissal disputes.

Employers also generally need to pay superannuation for eligible employees and hold WorkCover insurance in Victoria. If you employ staff on work visas, visa conditions and sponsorship obligations also matter, and our immigration lawyers can assist with that side.

Overseas investors (FIRB) and family business succession

Investors from Malaysia, Singapore, Hong Kong or mainland China acquiring Australian businesses, shares or commercial property may need to notify FIRB under the Foreign Acquisitions and Takeovers Act 1975. Most monetary thresholds are indexed on 1 January each year and vary by the investor's country and type of investment, while national security businesses, residential land and vacant commercial land need approval regardless of value. Completing without approval can lead to penalties, so confirm whether notification is needed before signing and make approval a condition of the contract.

Many Chinese family businesses were founded by the first generation, and succession raises questions about children's differing involvement, how ownership and management are split, and how Australian and overseas assets are dealt with. We can help plan share and trust structures, director and control arrangements, coordination with Wills and enduring powers of attorney, and written agreements among family members, using family meetings or mediation to work through disagreements where needed.

Frequently asked questions

Should I start my Melbourne business as a sole trader or a company?

It depends on risk, size, tax and future plans. A sole trader is simple but personally liable for all debts, while a company generally limits liability but has more administration and compliance. Assess it with your lawyer and accountant.

When buying a business, should I buy the assets or the company's shares?

An asset purchase usually takes only agreed assets and liabilities, while a share purchase takes the company with its past debts and contracts. Which suits you depends on the lease, licences, employees and tax.

What should I check before signing a retail shop lease?

Confirm whether the Retail Leases Act applies and that you received the disclosure statement at least 14 days before signing, and check rent reviews, outgoings, make-good, personal guarantees and assignment.

Can I change my mind after signing a franchise agreement?

Under the Franchising Code, new agreements generally have a 14-day cooling-off period during which the franchisee can terminate in writing, though the franchisor may keep reasonable expenses set out in the agreement. Review the disclosure document before signing.

Do overseas buyers need FIRB approval to acquire an Australian business?

It depends on the investor, their country, the type of investment and its value. Some categories need approval regardless of value, while others depend on thresholds indexed each year. Confirm before signing.

We want to hand our family business to the next generation. Where do we start?

Start by mapping current shareholdings, trusts and where assets are held, then clarify each child's role and expectations, and put a written plan in place alongside Wills, powers of attorney and a shareholders' agreement.

Whether you are starting a business, buying or selling one, signing a lease or planning family business succession, call 03 9602 3988 to book a meeting at our Melbourne CBD office at Level 2, 262 Queen Street, or by video, in Mandarin, Cantonese or English. Commercial and company matters are handled by Tan Chua.

This article is general information only and is not legal advice.

Reviewed by Tan Chua, Lawyer, Chua Tan Associates | Last updated: October 2026