Welcome to the Summer Edition of Commercial eSpeaking 2020.
We hope you enjoy reading all these articles, and find them both interesting and useful.
To talk further with us on any of the topics in this e-newsletter, or on any other legal matter, please be in touch. Our contact details are above.
Shareholdings for employees or family members
Rewarding value and increasing engagement
Bringing a key employee or a family member into your business by offering them a shareholding can be a powerful motivator and a significant indicator of how much you value their contributions to your success. However, the process should be done carefully with a robust shareholders’ agreement and company constitution, as there are many facets of the company-shareholder relationship that must be agreed upon to ensure a harmonious future between yourself and the new shareholders.
The circle of trust
First and foremost, your shareholders should be people whose values are aligned with those of your business. Even if they are minority shareholders, there are circumstances in which you will have to rely on their good judgement. The easiest way to prevent disagreements down
the road is to carefully consider their business sense, character and propensity for confrontation before embarking on shareholder discussions.
Restructuring your business
Consultation is key
New year, new you – new business structure? Restructuring is common in the new year when business owners feel refreshed and ready to take on the next challenge. The process however, is often shrouded in uncertainty (and stress) for employees.
Following the correct procedure for a restructure will allow your employees time to feel heard and to ensure decisions are made in good faith. They need to know your plans so they can ask the right questions and get the required support during a restructuring process.
What exactly is restructuring?
Restructuring includes anything that is the addition of new roles (not to be confused with hiring more of the same role you already have), merging two or more existing roles, losing roles that are now surplus to your business requirements or any combination of those changes.
The Ministry of Business, Innovation and Employment (MBIE) provides a recognised procedure for businesses to follow. It is documented in clear and easy to follow checklists that are available here.
Even if you follow the MBIE-approved procedures, there are common errors business owners make during a restructuring process.
Errors during the restructuring process can lead to grounds for a personal grievance (PG) being raised by one or more of your employees; dealing with
a PG is a costly and time-consuming exercise for your business. In order to avoid a potential PG, you should ensure the restructuring process follows the MBIE-approved procedures and your employee’s employment agreement, as well as avoiding some of the many pitfalls that are outlined below.
Unfair contract terms
The High Court has declared a contract term ‘unfair’ for the first time since the 2015 amendments to the Fair Trading Act 1986 (FTA) that make unfair contract terms unenforceable .
Home Direct Ltd sells goods to consumers online with delivery directly to a consumer’s home. Consumers can buy goods from Home Direct on credit and pay them off over time. Home Direct’s standard consumer contracts contained a voucher entitlement scheme. If a consumer continued to make direct debit payments to Home Direct after they had paid off their item, the additional payments would be converted into vouchers to be used to buy other items from Home Direct.
The scheme had two terms that, together, the court considered were unfair:
- The vouchers were non-refundable, and
- If not used within 12 months, the vouchers expired allowing Home Direct to keep the additional payments.
Under the FTA, a term in a standard consumer contract could be unfair if it creates a significant imbalance in the parties’ rights and obligations, is
not reasonably necessary to protect legitimate business interests and causes detriment to a party.
Businesses should be cautious when sending commercial electronic messages
The High Court recently imposed a $36,000 fine against the New Zealand Trustees Association for sending 24,000 unsolicited commercial electronic messages2. The Unsolicited Electronic Messages Act 2007 outlines the rules for anyone sending messages electronically with marketing or promotional material, known as ‘commercial messages’.
Mānuka honey trade mark disputes
An ongoing dispute for the MANUKA HONEY trade mark demonstrates the importance of identifying your intellectual property (IP) and protecting that IP in the markets in which you trade.
The Mānuka Honey Appellation Society (MHAS) in New Zealand has applied to register a certification trade mark for MANUKA HONEY, which would limit the use of the term ‘Mānuka Honey’ in New Zealand to strictly New Zealand-based products.