Scale with Confidence: The 5 Legal Essentials for Growing Businesses
As startups grow into scaleups, the path to success becomes more complex—and so do the legal risks. From disputes between co-founders to intellectual property ownership, regulatory compliance, fundraising obligations, and poorly drafted contracts, these challenges can derail even the most promising ventures. Allied Legal, long-term partners of our CORE Start program are committed to helping businesses anticipate and navigate these hurdles. Allied Legal share the key legal insights and practical tips to help founders and leaders safeguard their ventures, avoid common pitfalls, and scale with confidence.
1.Co-Founder and Shareholder Disputes
At Allied Legal, we have seen that disputes between co-founders and shareholders often intensify as a business transitions from startup to scale-up. When the stakes are higher, disagreements over roles, equity, or strategic direction can quickly turn into serious conflicts. The common issues faced where there was no clear Shareholders’ or Founders’ Agreement are disputes around IP ownership, share vesting, and exit strategies.
These disputes can drain time, energy, and resources. They can freeze decision-making, unsettle teams, and make investors nervous about the future of the business. We have helped many scale-ups work through these challenges, but our strongest advice is to plan ahead. Putting robust shareholder or founder agreements in place early is essential so that if conflicts arise, everyone knows their rights and obligations, and the business can keep moving forward with confidence.
Pro Tip: Start with a robust shareholder agreement and regularly revisit and update it as your business evolves. This ensures it reflects current realities and keeps everyone aligned.
2. Intellectual Property (IP) Ownership Issues and Losing Trademarks
Intellectual property ownership issues often become major stumbling blocks for scaleups. As a business grows, its brand, technology, and creative assets become more valuable, yet many founders overlook the importance of securing proper ownership and protection for these assets. We’ve had too many businesses come in and discover too late that key IP is owned by individual founders, contractors, or third parties rather than the company itself.
Another critical risk is losing trademark rights, which can force a business into an expensive and disruptive rebrand or litigation. Many of our clients have faced major challenges because they did not register their trademarks early enough or because someone else registered a similar name in a key market. Rebranding goes beyond simply changing a logo or website as the rebrand can confuse customers, weaken brand recognition, and derail marketing and expansion plans.
Pro Tip: Conduct a comprehensive IP audit early on and regularly update it as your business evolves to make sure all valuable assets are properly owned and protected. Make sure you prioritise your trademark registrations and actively monitor for similar marks to oppose potential conflicts before they become a problem.
3. Non-Compliance with Regulatory Laws
This message is especially relevant for businesses connected with CORE Hub operating in the industrial and mining sectors, where regulatory compliance is both critical and highly complex. These industries are subject to stringent rules covering safety, environmental protection, privacy, advertising, and various sector-specific approvals. We have worked with scaleups in these industries that launched new products or services without securing the required licences or permits, or where they underestimated how cross-border /state operations trigger different legal obligations, resulting in instances of non-compliance.
Non-compliance can be devastating. We have seen companies hit with significant fines, forced shutdowns, or serious reputational damage, any of which can threaten the future of a growing business. For scaleups working in industrial and mining sectors, the stakes are higher because regulatory breaches can also put people and the environment at risk, attracting further scrutiny.
Pro Tip: Start by listing all licences and permits your business needs and check them regularly with a legal expert.
4. Fundraising and Securities Law Breaches
Raising capital is crucial for scaleups but involves complex legal responsibilities that are often overlooked. Common mistakes include inadequate or non-compliant disclosure documents, misusing exemptions like sophisticated investor rules, issuing equity or convertible notes without proper agreements, ignoring ongoing disclosure and reporting duties, and exceeding fundraising limits.
Importantly, depending on your fundraising activities and products offered, you may also require an Australian Financial Services (AFS) licence or need to engage an AFS licensee to legally provide financial services. Failure to comply can lead to severe penalties, forced capital returns, investor lawsuits, and failed deals.
Pro Tip: Before raising funds, conduct a thorough legal review of your fundraising structure, disclosure documents, and exemptions to confirm if an AFS licence is required and then set up an ongoing compliance process to manage reporting and investor communications.
5. Poorly Drafted Commercial Contracts
Lastly, many scaleups fall into the trap of signing supplier, distribution, or customer agreements without carefully negotiating key terms. Sometimes businesses rely on handshake deals or standard contracts without fully understanding clauses around termination rights, liability limits, or exclusivity obligations. These oversights can lock a company into unfavourable arrangements that harm cash flow, limit scalability, or restrict market freedom.
Worse still, poorly drafted contracts often lead to expensive litigation and lengthy disputes that drain resources and distract from growth. We have seen cases where suppliers copied processes or product designs due to ineffective non-disclosure agreements, resulting in lost stock and significant competitive harm. Failure to properly protect intellectual property and clarify ownership can expose startups to costly risks with suppliers over copyright, stock management, and product quality.
Pro Tip: Always have an Australian lawyer review and customise your contracts to ensure key terms such as termination rights, liability caps, exclusivity, and intellectual property ownership are transparent, fair, and aligned with your business goals before signing anything.
