Many children of business families do not want only to inherit the family company. They want to build something of their own: a technology venture, a food brand, an import business, a hospitality or property concept. Some start inside the family group. Others deliberately keep their distance from it.
The legal needs of a next-generation founder are different from those of the parents’ estate plan. A Will or trust is usually prepared once and reviewed now and then. A growing business raises legal questions every month: a supplier contract, a co-founder disagreement, a term sheet, a lease, an opportunity in Asia.
This article explains in general terms how Chua Tan Associates works with next-generation entrepreneurs in Melbourne, including families with links to mainland China, Hong Kong, Malaysia, Singapore and elsewhere in Asia.
Who we work with
- Founders starting their first venture while their parents run an established business.
- Second-generation owners who have taken over part of the family business and want to grow it in a new direction.
- Siblings or cousins building a venture together, sometimes with outside co-founders.
- Young owners expanding a business between Asia and Australia.
Building, not just inheriting
Succession planning tends to ask how wealth passes down. Founders ask different questions: who owns what, who decides, how money comes in, and how risk is kept inside the new venture rather than spilling into the family’s assets. Separate articles discuss the legal issues for founders whose family already has a business, raising capital, and the commercial contracts a growing business uses.
Ongoing corporate advice rather than a one-off document
A Will is a single job; acting for a growing business is a relationship. Over time we come to know the business, its people and its history, so advice on one contract can take account of the last one, and issues can often be raised before they become disputes. Ongoing corporate work may include:
- company records, resolutions and registers kept in order;
- share issues, transfers and option grants;
- director appointments and the directors’ duties that come with them;
- shareholders’ agreements and constitutions that fit how the founders actually work;
- a periodic review of the structure with the client’s accountant.
Contracts and deals
Most day-to-day work is commercial: terms of trade, supply and distribution agreements, licences, service agreements, leases, investment documents, and business sales and purchases. Our commercial work is supported by a broad library of contract precedents, which we adapt to the deal in front of us rather than handing over a generic form.
Governance, and a sounding board
Young founders often have no one neutral to think aloud with. Parents may have strong views; co-founders and investors have their own interests. Part of our role can be to act as a sounding board and mentor on governance and business questions: when to bring in a co-founder, how to set up a board or how to handle disagreement with a parent who is also an investor.
Justin Chua brings a business as well as a legal background to these conversations. He studied commerce with an accounting major, worked in finance in Hong Kong before entering law, and has owned and run businesses, including hospitality and accommodation businesses and a real estate agency. He holds a real estate agent’s licence and is an Accredited Family Business Advisor and a Nationally Accredited Mediator. As a second-generation lawyer in a family firm practising since 1990, he has seen the founder–successor relationship from the inside. Our role remains legal advice; financial and tax advice comes from the client’s accountant and other licensed advisers.
Bringing opportunities and people together
We work alongside accountants, brokers, financiers, migration lawyers and lawyers overseas, and can help bring opportunities and the right people together. Our firm includes colleagues who are Accredited Specialists in Immigration Law, which can matter when a venture plans to bring staff, founders or investors from overseas.
Introductions raise their own legal issues. Where anyone is paid for introducing an investor, lender, buyer or customer, questions may arise about financial services or credit licensing, state business agent licensing, and conflicts of interest. Fees should be disclosed to everyone affected and properly documented. We do not take part in undisclosed fees or secret commissions. Getting more value from a deal means structuring it lawfully and transparently, for example through equity participation, follow-on rights, an ongoing role, or a documented fee.
How we work
For ongoing clients we usually agree regular check-ins, so upcoming contracts, hires, raises and disputes are discussed early. We coordinate with the client’s accountant, because company structure, tax and legal documents need to line up. Each piece of work has a written scope and costs disclosure.
Where money is coming from overseas, it must comply with the laws of the country it leaves and with Australian law. We work with lawyers in that country on any outbound approvals. Australian banks will ask about the source of funds and source of wealth, and anti-money laundering and counter-terrorism financing laws apply.
Working with parents, in English and Mandarin
Parents are often involved: as investors, lenders, guarantors, directors or simply advisers. Where they are more comfortable in Mandarin or Cantonese, we can explain documents in those languages. Early on we need to be clear about who our client is: the founder, the new company, or the parents. Where interests may differ, for example on a parent’s loan or guarantee, the parents may need separate advice, and confidentiality has to be respected.
A hypothetical scenario
Consider a daughter whose parents run an import business in Melbourne with suppliers in Guangdong. She wanted to launch her own online brand using family supplier relationships and money from her parents. Questions arose about whether the brand should sit inside the family group, how her parents’ money should be documented, who owned the brand name and customer data, and how decisions would be made if she brought in an outside co-founder. The right approach depended on facts that needed advice.
Questions to discuss with your adviser
- Is the new venture meant to be separate from the family group, and do the documents reflect that?
- Who is the client, and do any family members need separate advice?
- How often should we review the structure, contracts and governance?
- Is anyone being paid for an introduction, and is that licensed, disclosed and documented?
- Does money from overseas comply with the rules of the country it leaves and of Australia?
Frequently asked questions
Do I need a lawyer for my startup in Melbourne?
Not every task needs a lawyer, but early decisions about structure, co-founders, ideas and family or investor money can be costly to unwind.
What is the difference between a commercial lawyer and an estate planning lawyer?
Estate planning deals with how assets pass on death or incapacity. Commercial work deals with how a business is owned, run and contracts with others. For business families the two overlap and need to be coordinated.
Can my parents’ lawyer act for my new business?
Sometimes, but it depends on whether your interests and theirs might conflict. A lawyer must consider this at the start and may recommend separate advice for part of the work.
Every family’s situation is different, and the answer often turns on details. Book a consultation so we can review your documents and circumstances before you act.
How Chua Tan Associates can help
Chua Tan Associates has practised in Melbourne since 1990 and acts as ongoing corporate and commercial counsel to growing businesses, including next-generation founders from business families in Australia and Asia. Justin Chua trained in accounting (Bachelor of Commerce, accounting major), worked in finance in Hong Kong and has run his own businesses. He is a Nationally Accredited Mediator and an Accredited Family Business Advisor. We work with the client’s accountant and registered tax agents, financiers and lawyers in Asia, and we advise in English, Mandarin and Cantonese.
Important: This article is general information only and must not be relied on. It is not legal, tax or financial advice, does not take your circumstances into account, and may not reflect changes in the law after publication. Laws of other countries may also apply. Do not act or refrain from acting on the basis of this article. Reading it or contacting us does not create a lawyer–client relationship. Please book a consultation for advice on your situation.
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Chua Tan Associates acts for families, executors, trustees and their professional advisers in estate planning, estate administration and estate disputes in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice.
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