Asset Protection and Risk Management for Business Owners

Relevant For:

Business owners, senior employees, and stakeholders seeking to understand and mitigate risks associated with business operations and asset protection.

Key Points:

  • Personal liability risks arise from key legislations (e.g., Competition and Consumer Act 2010, Work Health Safety Act 2011).
  • s.37A Conveyancing Act allows asset recovery without insolvency.
  • Properly drafted Binding Financial Agreements (BFAs) are crucial but can be voided in insolvency.
  • Doctrine of exoneration protects non-benefiting joint property owners.
  • Legal privilege extends to some advisor communications, but with strict conditions.
  • Professional advice is essential for effective risk management and asset protection.

Full Article:

Owning a business comes with inherent risks. Despite corporate structures, personal liability remains a concern. Avoiding risk entirely isn’t practical; hence, effective asset protection strategies are crucial.

Here, we explore key risk areas and tools to enhance your asset protection strategy.

Personal Liability from Company Operations

Business owners must be aware of statutory provisions that could impose personal liability. Key legislations include:

  • Competition and Consumer Act 2010: Individuals can be liable for misleading and deceptive conduct.
  • Work Health Safety Act 2011: Defines ‘person’ broadly, including corporations.
  • Contaminated Land Management Act 1997: Directors may face personal compliance costs.
  • Privacy Act 1988, Spam Act 2003, Do Not Call Register Act 2006: Officers can be liable for breaches.

Seeking professional advice early is crucial to manage and reduce potential personal liability.

Asset Recovery Without Insolvency – s.37A Conveyancing Act

Under s.37A of the Conveyancing Act (NSW), any property transfer intended to defraud creditors is voidable, even without insolvency proceedings. Creditors can recover debts if the transfer hinders their legal remedies. Purchasers must seek specialist advice to avoid involvement in such transactions.

Importance of Binding Financial Agreements

Binding financial agreements (BFAs) help couples manage asset division in case of relationship breakdown. Strict compliance with statutory criteria is required, and poorly drafted BFAs can be overturned in insolvency events. Consult family law experts to ensure robust asset protection.

Doctrine of Exoneration

This doctrine applies to jointly owned properties where borrowed funds benefit only some owners. Loans are repaid first from the benefiting owner’s share, preserving equity for others. Ensure you understand this doctrine when securing loans against jointly owned properties.

Legal Privilege Protection

Communications between a lawyer and client are generally protected by legal privilege. This can extend to communications involving other advisors, but only if they serve the dominant purpose of obtaining legal advice. Professional advice is essential to navigate this complex area and maintain privilege.


Effective risk management and asset protection require awareness of personal liability, statutory provisions, and legal tools. Professional advice is indispensable in developing a comprehensive strategy.