Look Before You Leap when dealing with Trade Marks

If you run a small businesses, you should carry out adequate due diligence before starting trade. One of the matters that you should check before starting trade is the name of your business or the name of your brand.

If you sell items or products under a brand name, you should also check if the name of your brand is similar to or would conflict with other products on the market. A thorough search of trade marks, brand names and business names should be carried out before settling on a name for your business or product.

You should also be mindful that a registered business name is not the same as a Trade Mark.

There is nothing worse than settling on a business or brand name and embarking on an extensive marketing project, only to receive a letter from a competitor saying that your business or brand name is similar to theirs. Failure to do the proper checks and searches may result in an expensive re-branding exercise.

If, after carrying out a careful search on trade marks and business names, you find that there are no similar sounding trade marks or business names, you should consider if the additional benefits of registering your business name or brand name as a trade mark.

Registering your business name or brand name as a trade mark can protect you from other people claiming that your mark is identical or similar to theirs. In addition to this, you may be able to stop others from using your registered trade mark.

It is always best to “look before you leap”, especially when it comes to these matters.

Director’s Duties

No matter the size of your company, if you are a director of a company, you have a number of duties and responsibilities to both the company and the public. These duties are primarily imposed by the Corporations Act 2001 (Commonwealth). In addition to their duties under the Corporations Act, directors have a number of other duties set out in various other legislation as well as the common law.

It is important to understand and comply with these duties. The failure to comply with these duties may result in directors being personally responsible for any loss caused by the breach of these duties, or even criminal prosecution by the Australian Securities and Investment Commission (ASIC).

The most significant duties of directors are:

To act in the best interest of the company

A director must act in the best interests of a company and to its shareholders as a whole, ahead of their own personal interest. This can get confusing especially in a situation where the directors and the shareholders are one and the same – a common scenario in small businesses. It is important to remember that the company is considered a separate legal entity, has its own interests, and these interests may not be the same as the director’s interests.

To act with care and diligence

A director must perform their duties with the same care and diligence that a reasonable person would have should they be in the director’s shoes.

To act in good faith

A director must perform their duties in good faith, and dishonestly or fraudulently.

To use their position as a director for the proper purposes

A director has an enviable position that allows them to control the company’s business. It is important that they do not abuse this position to act in their own interest, or the interest of someone else. In addition to this, a director would commonly come into information as a result of his or her position. A director cannot use this information to act in their own interest or the interest of someone else.

To avoid conflicts of interest

Directors also have a duty to avoid any actual or potential conflict between their interests and the interests of the company. This arises from the duty of a director to act in the best interests of the company.

To prevent the company from continuing trade if it is insolvent

A director has a duty to prevent the company from incurring additional debt if there is a reasonable suspicion that the company cannot pay its debts when it falls due. This duty is not exercised for the benefit of the shareholders, rather it is exercised for the benefit of the creditors.

Other duties and responsibilities

There are numerous other laws affecting trade practices, taxation, environmental protection, and occupational health and safety that apply to companies. A breach of those other laws may give rise to a director being held liable for the breach.

Summary

If you are a director of a company, it is important to be aware of the core responsibilities and duties that have been imposed upon you by the law. While your primary duty is towards the company, you also have duties towards the shareholders, creditors, and the public. The failure to comply with these duties may result in directors being held personally liable for breaches of these duties. If you are unclear about the duties you should comply with or you are unsure of where you stand, you should seek legal advice as soon as possible.