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Corporate governance isn’t just for listed companies with ASX reporting obligations. It is a critical foundation for small to medium enterprises (SMEs) who want to grow sustainably, set up for sale, minimise risk and build trust with customers, partners and investors. Good governance is not a legal luxury; it’s a practical business tool.
The Corporations Act: Why It Applies to SMEs Too
Under the Corporations Act 2001 (Cth), every company regardless of size, must meet minimum standards of accountability, recordkeeping, director oversight, solvency and shareholder management. For SMEs this means (amongst other obligations):
- Directors must act with care, diligence, good faith and in the best interests of the company.
- Financial records must be accurate and up to date, even if the company isn’t required to lodge full financial reports.
- Shareholder rights and decision making processes must be properly documented, including resolutions, meeting minutes, share transfers, and key approvals.
- Conflicts of interest and related party dealings must be managed transparently.
These obligations operate regardless of team size or revenue. Many SMEs unintentionally fall short simply because they lack internal governance structures, not because they lack intent.
Internal Board Governance: The Backbone of a Healthy SME
Even SME’s with only one or two directors benefit from clear internal governance processes that strengthen compliance and business performance:
- Regular, Documented Board Meetings: Keeping consistent board minutes, resolutions, and decision records is essential, not only to demonstrate compliance with the Corporations Act but also to protect directors if decisions are ever challenged.
- Clear Delegations and Accountability: Clarifying who has authority to make important decisions around finance, HR, contracts, and risk. A simple Shareholders’ agreement reduces operational bottlenecks and prevents informal or inconsistent decisionmaking.
- Managing Risk Proactively: Governance frameworks help SMEs identify financial, operational, employment and regulatory risks early before they become costly problems.
This is where legal corporate governance reviews are an effective tool for SMEs. A tailored review highlights gaps, sharpens compliance and ensures the business structure aligns with your goals.
Shareholder Compliance: Keeping Everyone Aligned and Protected
Shareholder governance often becomes messy in SMEs because relationships begin informally. But as the business grows, informality becomes risk.
SMEs should ensure:
- Shareholder agreements reflect reality, including voting rights, exit arrangements, equity transfers and dispute mechanisms.
- Share registers, ASIC records and share movements are kept accurate and uptodate.
- Major decisions like issuing shares, declaring dividends, appointing directors and selling assets are properly approved and recorded.
Strong shareholder governance preserves trust, reduces disputes and prepares the business for investment, sale, or succession. Burch&Co frequently assists SMEs through drafting, updating and negotiating shareholder agreements that are futureproof and commercially practical.
The Increasing Regulatory Pressure on SMEs
Regulatory expectations are rising across the board. For example, upcoming changes to the Privacy Act mean SMEs will soon face greater scrutiny over compliance, data handling and customer privacy, with both penalties and reputational risks attached to noncompliance.
Meanwhile, SMEs involved in transactions such as acquisitions or restructures must meet detailed governance and compliance obligations around licensing, employee transfers, business records, and statutory disclosures. These requirements, seen in commercial transaction documentation Burch&Co regularly manages, highlight how deeply governance is tied to daytoday operations.
How Burch&Co Helps SMEs Build Strong Governance
Burch&Co works closely with SMEs across corporate, commercial, dispute resolution, employment and privacy matters, giving the firm a practical understanding of the governance pressures SMEs face.
1. Corporate Governance Reviews: We assess existing governance frameworks; director processes, documentation, risk controls and delegations and provide clear, actionable recommendations tailored to the size and sophistication of the business.
2. Shareholder Agreements & Shareholder Management: We prepare, review and negotiate shareholder agreements, update ASIC and share register records, draft resolutions and ensure shareholder governance aligns with both legal obligations and commercial goals.
3. Restructures: Whether reorganising ownership, creating new entities, adjusting shareholdings or preparing for future investment, we support SMEs to document and execute restructures smoothly in conjunction with your tax and accounting advisors.
4. Transaction Support: For SMEs buying, selling or preparing for exit, we manage governanceheavy requirements including due diligence, employee transfers, contract reviews, regulatory disclosures and transactionready corporate hygiene.
With Burch&Co’s practical, humancentred approach SMEs gain clarity, confidence and compliance without unnecessary complexity. Good governance isn’t bureaucracy; it’s longterm value.
If you’re planning for growth, restructuring, or preparing for sale, our corporate team can help.
