The Australian Federal Parliament recently passed significant amendments to the unfair contract terms regime to increase the scope of the regime and applicable penalties. The changes came into effect 9 November 2023 and trigger essential changes for Australian businesses to implement over the next 12 months.

Time is of the essence for companies to prepare for changes to unfair contract terms (UCT) laws. The new regime will apply to standard form contracts entered into or renewed following 9 November 2023, and to terms of standard contract terms varied after this date.
In this article, we explore the regime changes and how your organisation can prepare for the new reforms.

A Company Constitution is a legally binding agreement between your company and its internal members that defines rules related to internal governance, business activities and rights and obligations of its internal members. It is submitted as part of a company's incorporation process.

When hiring contractors, it is important to distinguish whether a person is a contractor or actually considered an employee, as there are certain taxation, superannuation and workers compensation rules attached to hiring employees as opposed to contractors.

The company must issue a prospectus (or with ASX’s agreement, an information memorandum if the company is undertaking a compliance listing without raising capital) before it can be listed on ASX.

When an offer of new securities is made to Australian retail investors, a prospectus (which has been lodged with ASIC) must be issued to investors.

A prospectus (or other disclosure document) is also required for secondary sales of previously issued securities in certain circumstances.  The “on-sale” provisions contained in the Corporations Act (which impose this disclosure requirement) are intended to prevent companies or sellers from avoiding the prospectus requirements by issuing or selling their shares to sophisticated and professional investors only (who do not ordinarily require a disclosure document) only for those purchasers to “on-sell” those shares to retail investors.

A proprietary company cannot issue or offer to sell shares to the public or retail shareholders. In this respect, it will be necessary for a proprietary company to convert to a public company before an IPO.  Alternatively, a new public company could be established to be the IPO vehicle and to own the shares in the proprietary company.
It will be important to determine early in the process which entity will be listed. This will depend on a number of factors

To meet the assets test, the company must satisfy certain criteria.

To meet the profit test, the company must satisfy certain criteria.

A company seeking general admission must satisfy certain criteria before it can be granted official listing on ASX

There have been changes to the laws relating to trusts which mean that if your trust was created prior to a particular year, it should be reviewed by your lawyer and accountant. If your trust does not comply, you could find yourself with a problem and it could result in you having to pay not only more tax but penalties and interest to the Australian Tax Office (ATO).

In order to raise capital, companies issue securities which may includes shares, debentures, and options to acquire shares and debentures. The Corporations Act 2001 (Cth) requires that disclosure to be made, subject to the certain exemptions, where an offer is made. If there is a failure to disclose in accordance with the provisions or where material misstatements or omissions have been made, issues surrounding civil and criminal liability may arise.

Asset protection is the practice of safeguarding the value of one's assets from potential threats such as legal action, bankruptcy, and financial hardship. Asset protection is the adoption of strategies to guard one's wealth. Asset protection is a component of legal & financial planning intended to protect one's assets from creditor claims.
Individuals and business entities use asset protection techniques to limit creditors' access to certain valuable assets while operating within the bounds of debtor-creditor law. Protecting your assets means putting in place legal strategies that will safeguard your wealth in the unfortunate event of a lawsuit or creditor claims.

APP entities must ensure that they comply with all requirements relating to the use and disclosure of personal information.
The use of personal information occurs when an APP entity handles and manages that information within the entity’s effective control. This includes accessing and reading personal information, making a decision based on personal information and passing personal information from one part of the entity to another.

As artificial intelligence continues to advance, new technologies such as ChatGPT are emerging. While these technologies have the potential to greatly improve the efficiency and accuracy of legal drafting, they also raise important legal questions.

The collection of personal information involves the gathering, acquiring or obtaining of personal information from any source and by any means. It can include the collection of the information from individuals, other entities, generally available sources, such as newspapers or websites, surveillance cameras and the metadata generated by web browsing

The Privacy Act regulates the way in which APP entities handle ‘personal information’. There are sub-sets of personal information, namely ‘sensitive information’ and ‘health information’, that are subject to a higher level of protection than personal information, about which it is advisable to obtain specialist legal advice.

'Data’ can be broadly defined as any information that has been reduced to characters, words, numbers, images, sound or video. Data can be collected to form 'datasets', a collection or record of data organised according to a common context or criteria. 

Data can be categorised according to the nature of the information it contains, for example, health data, personal data, research data, business data and consumer data. 

The amount of data created globally is growing at an exponential rate. Data can be a major source of value for businesses in an economic sense, and valuable to individuals on privacy grounds. 

The principal statute regulating the collection, use, storage and disclosure of ‘personal information’ is the Privacy Act 1988 (Cth) and in particular the 13 Australian Privacy Principles (APPs) that form part of that Act. The Privacy Act is administered by the Office of the Australian Information Commissioner and the Australian Privacy Commissioner within that office.

Confidentiality Agreements are frequently entered into to protect the disclosure of confidential information during negotiations for the sale of a business, for the purposes of a partnership or joint venture, when engaging an external consultant and in employment contracts.

Whilst the confidential information disclosed in these scenarios may be protected by general law (equity), it is often preferable to require recipients of confidential information to enter into Confidentiality Agreements before receipt so that:

• the recipient is prevented from claiming that the disclosed information is not confidential;

• the identity and scope of the confidential information, as well as any exceptions to the obligation of confidentiality, are clearly defined; and

• contractual rights and obligations, beyond the protections afforded by general law, are created.

You only have until the end of this month to apply for your director identification number (DIN) if you have not done so. There are tough penalties for directors who do not obtain their DIN by the end of November 2022.  Fines could be as much as $1.1 million for failure to have a DIN when required.