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Whilst most people fantasise about driving their dream car, there are a few others who get lost in thoughts of designing their own car. However, starting your own car company doesn’t need to be some farfetched pipe dream. If starting your own car company is a serious ambition, with the right process and planning, the dream can become a reality.
Granted, starting a car company isn’t a simple process. A car company is a pretty high stakes venture — the first thing you want to do is get your legal house sorted. Let’s take a closer look at this below.
Is The Process Of Starting Your Own Car Company Difficult?
The process of starting a car company is not for the faint of heart as it’s a pretty complex process. On the legal end of things, proper company registration, intellectual property protection, strong legal documents and legal compliance are some of the basic considerations when starting your own car company. It’s important to recruit expert legal help when starting your car company – that way you can be assured everything is getting done correctly.
Is A Car Company The Same As A Car Dealership?
No, a car company and a car dealership are two very different types of businesses. A car dealership sells cars that have been manufactured by someone else. A car company on the other hand, produces their own cars.
When starting your car company, it’s imperative to properly map out your company’s purpose and goals. There’s a good chance you’ll be talking to a few investors, so creating a strong business plan is necessary to show you’ve thought this idea through.
What Is The First Step To Starting A Car Company?
After the research and planning stage, the official step to starting your car company is getting it registered with the Australian Securities and Investments Commission (ASIC). In Australia, all companies are registered with ASIC, as they are the main regulatory body for Australian companies.
The registration application for your car company can be completed online through the ASIC website however, you’ll need to iron out a few details first. To register your company, you will need to know:
- What legal structure your company will have
- Who the directors of your company will be
- Details about every company shareholder
- How the company will be governed
There’s also additional details you will need to know – such as what you will be naming your company, its bank account information and where its principal area of business will be. Before filling out your application form, it’s a good idea to take the time to properly plan for your company. The choices you make during the registration process are going to have a huge impact on your car company’s future, so it’s important to get everything right from the start.
Getting a legal expert to help out with registering your car company is highly recommended.They can guide you through the registration process and help you understand your ongoing obligations with ASIC once your company is finally registered. It’s also a good idea to chat with a legal expert about getting the necessary legal documents to accompany your company registration, such as a Shareholders Agreement or a Company Constitution. Much like properly registering your company, these documents will help form the foundations for your company and determine how major decisions will be made in the future – a legal expert can ensure they work in the best interest of your car company.
To learn more about the process of registering a company, take a look at our article Steps To Incorporate Your Small Business In Australia. We’ve also written about ongoing compliance and reporting measures for private companies – check it out here.
When I Register My Car Company, Will I Legally Own The Name?
The application process to register your company will ask another important detail – the name you’ve chosen for your company. You’ll need to pick a name that isn’t already taken by another company and jot it down in your application. If you don’t plan on trading with your company name (most business owners prefer not to) you will need to take the additional step of registering a business name.
Registering a company name, a business name or both does not mean you legally own that name. If you want exclusive rights and legal ownership over your company name, then you will need to register it as a trade mark. Branding is typically important for a car company, so there might also be a company logo you’re thinking of getting trade marked.
Business wise, sorting out your company’s intellectual property (IP) as early on as possible is a smart move. Research business names and logos, make sure the one you want hasn’t already been taken and get legal experts help in registering the trade mark(s) you want with IP Australia. Once your application is successful, you will have legal rights for exclusive use over your trade mark with the option to renew it every 10 years.
IP protection doesn’t just apply to trade marks, if your car company has designs or patents that need to be legally protected, they can also be registered with IP Australia. It’s best to get a legal expert in IP to help out with the application process though, as they can get fairly complicated. Plus, these applications can take a bit of time to process so starting over if something goes wrong can be an unnecessary headache.
Do I Need Any Legal Documents To Start A Car Company?
Yes, legal documents are necessary for the security and protection of your car company. It’s important to get them drafted by a legal expert so they can be tailored to the unique needs of your car company. A few legal agreements to consider getting include:
Non-Disclosure Agreement: Car company’s have a lot of competitors, so it’s especially important to secure private company information with strong NDA’s.
Privacy Policy: A website privacy policy is required by Australian privacy laws if your car company’s website is going to be collecting information from its users – even if you’re not collecting information, it’s good to have a privacy policy there for transparency.
Employment Agreement: A good relationship with staff members is necessary for a well-run company. Setting clear expectations and noting employee rights in an employment agreement is a good way to make sure you’re both on the same page.
Distribution Agreement: Clear communication with your distributors is necessary for a smooth process. A distribution agreement covers all matters — big and small so there’s nothing left to question.
Are There Any Laws I Need To Follow When Starting A Car Company?
Legal compliance is an essential part of starting and running your car company. Various different laws will impact your car company, so it’s important to seek expert advice to understand these laws and the best way to adhere to them. Remember, non-compliance with regulations can be detrimental for your business.
We’ve listed a few regulations you should look out for when starting a car company below.
Australian Consumer Law
Every Australian business needs to be familiar with the Australian Consumer Law (ACL). The ACL is the primary regulation governing the relationship between businesses and their customers, designed largely to protect consumer rights. As a car company, certain ACL regulations—such as those concerning product safety, warranties, refunds, guarantees, and advertising requirements—will be extremely relevant. Understanding your obligations under these regulations is essential.
Australian Design Rules (ADRs)
The Australian Design Rules (ADRs) determine the nation standards relating to vehicle safety, anti-theft measures and carbon emissions. Every vehicle needs to be submitted to the ADR for testing and inspection. If the car passes, then you’ll be granted a certificate signifying the car meets necessary requirements under the ADR.
Environmental Regulations
Any car your company launches needs to meet certain emissions standards. The National Environment Protection Measures (NEPMs) determine the appropriate emission standards for vehicles. Meeting these requirements is necessary for compliance with environmental regulations.
Additionally, your car company will also need to have strong policies for recycling and waste management. Waste should be disposed of in compliance with local environmental regulations.
Import And Export Regulations
When starting your car company, you might need to import materials from overseas. When doing so, you’ll need to comply with the rules set by the Australian Customs and Border Protection Service. This means correctly filling out all necessary documentation, being transparent, and ensuring that everything being imported is legal. The same rules apply to exporting goods.
Employment Law
Hiring employees to work in your car company means there needs to be strict compliance with employment regulations. The Fair Work Act sets out employee rights, including working conditions, hours, minimum wage, termination and much more. As an employer, it’s your legal duty to ensure your car company’s employees are being awarded their basic rights.
You will also need to comply with workplace health and safety requirements. These measures are there to ensure your employees aren’t harmed at work. Compliance with workplace health and safety requirements usually requires identifying potential risks and implementing measures to manage them – consider getting Workplace Policies and Staff Handbooks to aid with this task.
Next Steps
Starting a car company requires careful consideration of the legal factors impacting your company — it’s important to have the help of a legal expert when starting this venture.
- Starting a car company requires thorough planning and legal considerations, including company registration, intellectual property protection, and legal compliance
- Register your company with the Australian Securities and Investments Commission (ASIC) after determining your company’s legal structure, directors, shareholders, and governance
- Registering a company name or business name does not grant legal ownership; you must register it as a trade mark for exclusive rights
- Essential legal documents include Non-Disclosure Agreements, Privacy Policies, Employment Agreements, and Distribution Agreements, tailored to the company’s needs
- Adhere to Australian Consumer Law (ACL) for product safety, warranties, and advertising, and comply with the Australian Design Rules (ADRs) for vehicle safety and emissions
- Meet environmental regulations for emissions standards and implement recycling and waste management policies
- Comply with import/export regulations and employment laws, including workplace health and safety requirements
If you would like a consultation on starting a car company, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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