What kind of expenses am I expected to incur when entering into a Retail Lease?

We get this question a lot and it’s a tough one to answer! Not because we can’t – it’s just difficult to answer such a general question. There is no hard and fast answer to this question as it will depend on a large number of factors. In addition to rent, there are all sorts of costs that you would have to incur when you enter into a Retail Lease. These are both ongoing or one-off. Generally however you would incur the following outgoings:

  • Rent
  • Water Rates
  • Local Council Rates
  • Land Tax
  • Electricity Rates
  • Local Council Parking Levies (if premises offer council parking)
  • Local Council Outdoor Seating License (if premises have outdoor seating)
  • Public Liability Insurance
  • Glass Replacement Insurance
  • Building Administrative and Maintenance Fees(if premises is part of strata)
  • Marketing Fees (if premises is part of a larger shopping complex)

Outgoings will change depending on:

  • Floor space
  • Location
  • Value of the premises
  • Equipment on the premises
  • What you are doing

The above is a non-exhaustive list of matters. As stated there is no hard and fast answer to “what is expected” and “how much” it is expected to cost as these matters will change depending on where you want to lease. This is a matter for homework and you’ll likely get these answers once you’ve properly investigated the location of where you want to lease. But this isn’t a chicken and egg dilemma – in NSW the Retail Leases Act says that the landlord of retail premises must issue a “disclosure statement” to all potential lessees that sets out what these costs are before the lessee enters into the lease agreement.

Retail Leases can be complex – if you are entering into one, give us a call and we’ll guide you through the process and assist you with your transaction.

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.