Key Legal Documents Start-Ups Should Engage Lawyers (Not AI) to Draft

June 11, 2025

Launching a start-up in Australia is an exciting venture, but it also involves navigating a complex legal landscape. Engaging a lawyer to draft and review your foundational legal documents is crucial for protecting your interests, ensuring compliance, and setting your business up for long-term success. Below is a guide to the key legal documents every Australian start-up should consider, and why professional legal drafting (and not AI) is essential.


1. Company Constitution


Sets out the rules for governing your company, including director powers, shareholder rights, and meeting procedures. A well-drafted constitution tailored to your business can prevent future disputes and ensure compliance with the Corporations Act.


2. Shareholders Agreement (or Partnership Agreement)


Defines the rights and responsibilities of founders and investors. Covers share transfers, dispute resolution, exit strategies, and decision-making processes. Essential for start-ups with multiple founders or external investors to avoid misunderstandings and future conflicts.


3. Employment Agreements and Contractor Agreements


Clearly set out roles, duties, remuneration, confidentiality, and intellectual property ownership for employees and contractors. These agreements must comply with Fair Work legislation and other employment laws. Proper agreements help prevent disputes and clarify expectations.


4. Confidentiality and Non-Disclosure Agreements (NDAs)


Protect sensitive business information, intellectual property, and trade secrets when dealing with third parties, potential investors, or collaborators. NDAs are critical in the early stages of product development and fundraising.


5. Intellectual Property (IP) Assignment Agreements


Ensure that any intellectual property created by founders, employees, or contractors is legally owned by the company. This is vital for protecting your brand, technology, and other intangible assets.


6. Website Terms & Conditions and Privacy Policy


Terms & Conditions set the rules for users interacting with your website or app, limiting liability and setting out acceptable use. A Privacy Policy is legally required if you collect personal information, ensuring compliance with the Australian Privacy Act. Both documents are essential for online businesses and e-commerce start-ups.


7. Supply, Service, and Client Agreements


Define the terms of business with suppliers, customers, and service providers. Include payment terms, delivery obligations, warranties, and dispute resolution mechanisms. Well-drafted contracts reduce the risk of costly disputes and ensure clarity in commercial relationships.


8. Employee Share Scheme (ESS) Documentation


If you plan to offer equity to employees, clear documentation is required to comply with tax and corporate regulations. Lawyers can help structure schemes that attract talent while protecting the company.


9. Fundraising and Investment Documents


Includes term sheets, share subscription agreements, convertible note deeds, and loan agreements. Proper documentation ensures compliance with fundraising laws and protects both the company and investors during capital raising rounds.


10. Company Registration and ASIC Filings


Lawyers can assist with registering your company, obtaining an Australian Company Number (ACN), and ensuring all ASIC filings are accurate and timely. This includes drafting documents required for company formation and ongoing compliance.


Why Engage a Lawyer and Not AI for These Documents?


Inaccurate or Incomplete Clauses or Drafting: AI can miss critical legal terms or misunderstand your business context, leading to unenforceable or non-compliant agreements or documents.


False Sense of Security: AI-generated contracts may look professional but can be legally flawed or outdated, increasing the risk of disputes.


Lack of Customisation: AI cannot account for your unique business model, industry, or risk tolerance, leading to generic agreements that don’t fit your needs.


Regulatory Compliance Risks: Australian laws are complex and change frequently. AI tools may not capture all compliance requirements, exposing your start-up to fines or litigation.


Poor Drafting from Bad Inputs: AI is only as good as the information provided. Vague or incomplete instructions can result in agreements that do not reflect your intentions.


Conclusion


While AI tools and templates can be helpful for simple, low-risk documents, start-ups in Australia should always engage an experienced lawyer to draft or review critical legal agreements and documents. This ensures your business is protected, compliant, and set up for long-term success. Investing in legal expertise at the outset can save your start-up from costly mistakes and disputes down the road.

Crabtree Legal Now a Proud Business Sponsor of Sonshine FM: Perth’s Family-Focused Radio Station

July 30, 2025
Crabtree Legal is delighted to announce our new partnership as a business sponsor of Sonshine FM , Perth’s family-focused radio station. As a firm committed to supporting local communities and family values, we’re thrilled to align ourselves with a station that shares our dedication to enriching the lives of Perth families. Why Sonshine FM? Sonshine FM is Perth's leading Christian radio station, offering uplifting, family-focused content to keep listeners connected and inspired. The station has earned deep community trust, making it a natural partner for Crabtree Legal as we strive to help individuals and businesses achieve their goals with confidence and clarity. Supporting Our Community From company set-ups and business structuring to Wills, estate and succession planning , Crabtree Legal is committed to providing high-quality, approachable legal services rooted in integrity and care. Our sponsorship of Sonshine FM allows us to give back to the community that has supported us, reinforcing our commitment to being there for you—whether in the boardroom or at the kitchen table. Listen Out for Our Radio Ads As part of our sponsorship, our firm adverts will be airing on Sonshine FM over the coming months. Tune in to hear how Crabtree Legal can help you with: starting up, buying or selling a Business; and/or preparing Wills and providing estate planning advice. Hear our latest radio ads here: Crabtree Legal on Sonshine FM – Commercial Law . Crabtree Legal on Sonshine FM – Wills, Estate & Succession Planning . Thank You for Your Support We are deeply grateful to our clients and the wider Perth community for your trust. This sponsorship marks another step in our journey to make expert legal advice accessible and to provide support to families and businesses in Western Australia. Ready to take the next step for your business or personal legal needs? Contact Crabtree Legal today and discover the difference that genuine expertise and care can make.

Why Every New Company Needs a Shareholders Agreement—Drafted and Executed Early

July 16, 2025
Starting a new company is an exciting venture, but establishing a solid legal foundation from the outset is critical for long-term success. One of the most overlooked yet essential documents for any business with more than one shareholder is a Shareholders Agreement. Engaging a commercial lawyer to draft and assist you to validly execute this agreement at the commencement of your business can protect your interests, prevent disputes, and set your company up for lasting stability. What is a Shareholders Agreement? A Shareholders Agreement is a private, legally binding contract between a company’s shareholders (and often the company itself). It sets out how the company is managed, how key decisions are made, how exits or disputes are handled, and what happens if a shareholder wishes to leave or transfer their shares. Key Reasons to Get a Shareholders Agreement Drafted by a Commercial Lawyer 1. Clarity and Certainty on Roles and Rights Clearly outlines each shareholder’s rights, responsibilities, and decision-making powers from the outset. Removes ambiguity around management structure, voting rights, and director appointments, helping to avoid misunderstandings and conflicting expectations. 2. Preventing Costly Disputes Provides agreed procedures for resolving conflicts, often through internal mechanisms and alternative dispute resolution before court action. Helps ensure minor disagreements do not escalate into expensive and disruptive legal battles. 3. Protecting the Interests of All Shareholders Safeguards the investments and interests of both majority and minority shareholders, preventing unfair treatment and providing mechanisms for redress. Outlines how decisions are made, including which require unanimous or special majority consent, benefiting both active and passive shareholders. 4. Smooth Share Transfers and Exit Strategies Details rules for issuing new shares or transferring existing ones, including pre-emptive and “drag-along” or “tag-along” rights. Ensures continuity and stability if a shareholder wishes to leave, retires, or passes away, preventing unwanted third parties from joining the company. 5. Business Growth and Investment Readiness Demonstrates business maturity and governance, giving confidence to future investors, banks, and other stakeholders. Investors often insist on a robust agreement as a prerequisite for funding rounds or other strategic partnerships. 6. Protecting Confidentiality and Company Value Includes clauses safeguarding against misuse or disclosure of confidential company information. Prevents former shareholders from directly competing with the business or poaching key staff and clients. Why Get Help from a Commercial Lawyer? While some templates are available online, they rarely address the unique dynamics and needs of each startup. A commercial lawyer will: Tailor the agreement to your business’s structure, goals, and risk profile. Ensure compliance with the Corporations Act 2001 (Cth) and other relevant Australian laws. Minimise the risk of unenforceable or contradictory clauses and keep your agreement up-to-date as your business evolves. The Importance of Executing the Agreement at Commencement Executing a shareholders agreement at the start of your business journey: Ensures all founders and shareholders are aligned before capital, effort, and goodwill have been significantly invested. Avoids “moving the goalposts” after the fact, when negotiations may be more contentious or when disputes have already emerged. Ensures the terms are legally binding and enforceable, giving all parties true peace of mind. Conclusion A shareholders agreement is not a statutory requirement—but for any new Australian company with more than one shareholder, it is a critical tool for risk management, governance, and business success. Engaging a commercial lawyer to draft, tailor, and help you execute this document from day one offers real protection and clarity for your business and its investors. If you’re setting up a company, connect with Crabtree Legal to ensure you start up with the right legal structure in place. We can help tailor a shareholders agreement to fit your business, safeguard your rights, and support your future growth. This article is provided for general information only and does not constitute legal advice. For advice tailored to your business, please contact Crabtree Legal.

Understanding Trusts in Western Australia: A Guide for Individuals and Business Owners

July 8, 2025
What Are Trusts? A Trust is a legal arrangement where a person or entity ( the Trustee ) holds and manages assets for the benefit of others (the Beneficiaries ). The Trustee is responsible for administering the Trust in accordance with its terms and in the best interests of the Beneficiaries. Trusts are commonly used for asset protection, estate planning, and business structuring in Australia. Key Parties in a Trust Settlor : the person who creates the Trust and contributes the initial assets. Trustee : the individual or company responsible for managing the Trust assets. Beneficiaries : the people or entities who benefit from the Trust. Appointor : the person who has the power to appoint or remove Trustees. How Can Trusts Benefit Individuals and Business Owners? Trusts offer a range of advantages for both personal and business purposes: 1. Asset Protection Trusts can help shield assets from creditors, lawsuits, or family disputes, as the assets are legally owned by the Trustee, not the individual. 2. Estate Planning and Succession Trusts allow for the smooth transfer of wealth to future generations, helping to provide for minor or vulnerable Beneficiaries. 3. Tax Planning Trusts can offer tax flexibility. Income generated by Trust assets can be distributed among Beneficiaries, potentially reducing the overall tax liability. 4. Business Structuring Trusts are often used by business owners to separate business assets from personal assets, manage risk, and facilitate succession planning. 5. Privacy Trust arrangements are generally private, unlike Wills which become public during probate. How Are Trusts Created in Australia? Establishing a Trust in Australia involves several key steps: 1. Decide on the Type of Trust Common types include: Discretionary Trust : Trustee decides how income/capital is distributed among Beneficiaries. Common for family Trusts. Unit Trust : Beneficiaries hold fixed units, similar to shareholders in a company. Often used for business or investment purposes. Testamentary Trust : created by a Will, comes into effect upon the Will-maker’s death. 2. Prepare a Trust Deed A Trust deed is a legal document that sets out the terms and conditions of the Trust, including the powers of the Trustee and the rights of the Beneficiaries. 3. Settle the Trust The Settlor provides the initial asset (often a nominal sum) to establish the Trust. 4. Appoint Trustees and Beneficiaries The Trust deed will name the Trustees and Beneficiaries. The Trustee must accept their role and responsibilities. 5. Stamp Duty and Registration In Western Australia, unlike some other Australian states, stamp duty is not payable on the mere execution of a Trust deed and it does not need to be stamped. Registration with the Australian Taxation Office (ATO) will be necessary if the Trust will have a Tax File Number or Australian Business Number. 6. Ongoing Compliance Trustees must comply with the terms of the Trust deed and relevant laws, including annual reporting and tax obligations. If you are considering establishing a Trust, Crabtree Legal can provide tailored advice to ensure your Trust is structured to meet your personal or business needs.