When selling a business in Australia, sellers have specific obligations to disclose information to buyers — though what you’re legally required to hand over depends heavily on which state you’re in and the size of the deal. In South Australia and Victoria, mandatory disclosure documents are prescribed by law. In NSW, Queensland, and Western Australia, there are no equivalent requirements. Across all states, the common-law duty not to mislead applies to everyone.
Understanding the difference between what you must disclose, what you should disclose, and what you can’t share is what keeps a business sale from unravelling post-settlement.
What Are You Actually Required to Disclose?
Australian business sale law draws two distinct lines. The first is positive disclosure obligations — where the law requires you to hand over specific documents. The second is the duty not to mislead — where you can’t stay silent on material facts if that silence creates a false impression.
The duty not to mislead flows from the Australian Consumer Law (ACL) and the general law of contract. If you know something that would materially affect a buyer’s decision — a major customer about to leave, a lease renewal in doubt, an undisclosed liability sitting in the books — staying silent doesn’t make you safe. Courts have found sellers liable for misrepresentation even when they said nothing technically false, because the picture they painted overall was misleading.
The practical rule of thumb here: if a reasonable buyer would have paid less, or walked away entirely, had they known the fact, you probably needed to disclose it.
State-by-State Mandatory Disclosures
Only two Australian states have legislated mandatory disclosure requirements for business sales.
South Australia: Under the Land and Business (Sale and Conveyancing) Act 1994 (SA), businesses sold for under $200,000 (excluding stock) require a Form 2 — Vendor’s Statement. This sets out financial details for the previous three financial years and must be provided before contracts are exchanged. Miss it in SA and the buyer can rescind.
Victoria: Under the Estate Agents Act 1980 and related regulations, any business sold for under $350,000 must include a Section 52 Statement disclosing financial information for the previous two years. Usually drafted by the seller’s accountant, though a business broker typically delivers it. Same consequence as SA — not providing it gives the buyer rescission rights.
NSW, Queensland, Western Australia, Tasmania, ACT, Northern Territory: No mandatory disclosure statement required by statute. Which means the common-law duty not to mislead carries more practical weight in these states, precisely because there’s no prescribed form telling you what to cover. You’re on your own to decide what to say — and the ACL will judge whether you got that right.
Most businesses in the $1 million to $20 million range that Miro works with aren’t caught by the SA or VIC thresholds anyway. But the absence of a mandatory form doesn’t mean the absence of disclosure obligations.
Privacy Act Obligations — What Customer Data Can You Share?
This is the one most sellers and their advisors don’t think about until a buyer’s lawyer raises it during due diligence.
The Privacy Act 1988 governs what personal information about your customers, employees, and suppliers you can share with a prospective buyer. The Office of the Australian Information Commissioner (OAIC) has guidance specifically on business sales. The short version: you can share personal information with a prospective buyer for the purpose of negotiating or completing the sale, but you should de-identify data where that satisfies the due diligence purpose, and only share what’s genuinely necessary for the evaluation.
In practice, this matters most in customer-heavy businesses. If a buyer asks for your full customer list with names, contact details, and transaction history, you can provide it — but the right approach is to consider whether anonymised data (revenue by customer segment, without individual names) serves the purpose first. For health businesses — medical practices, allied health, aged care, anything operating under the Australian Privacy Principles for health information — the obligations are stricter still.
The practical answer for most sellers: run detailed personal data through a controlled data room with tracked access, document who sees what and when, and have a written data destruction or return process if the sale doesn’t proceed. This doesn’t add much cost and protects you from a Privacy Act complaint on the other side of a broken deal.
What You Should Disclose Voluntarily (Even When You Don’t Have To)
Here’s where experienced advisors earn their fee. In states without mandatory disclosure regimes, there’s a temptation to say nothing you’re not legally required to. That’s the wrong instinct — commercially and ethically.
Voluntary disclosure of known issues upfront does several things. It prevents a buyer from rescinding the contract after discovery. It builds trust in a process that’s built on trust. And it almost always produces a better commercial outcome, because buyers who find problems during due diligence don’t simply walk away — they reprice. And the reprice is nearly always more than the problem is worth.
I saw this exact outcome with a Perth commercial cleaning business, revenue around $3 million. The seller knew their largest customer — about 28 per cent of revenue — had been talking to a competitor. He didn’t mention it. The buyer’s accountant found the customer concentration during due diligence, made a few calls, and discovered the conversations. They didn’t walk. They just adjusted the offer down by $400,000. The seller would have been materially better off disclosing the risk early, addressing it with context, and accepting a much smaller adjustment. (He still made good money — it was just less good than it needed to be.)
Things you should disclose voluntarily, regardless of state:
- Customer concentration risk — any single customer over 20 per cent of revenue deserves a specific conversation
- Pending regulatory changes affecting the business or its licences
- Known staff departures, particularly key person risks
- Lease renewal risk or uncertainty about commercial property terms
- Pending litigation, disputes with suppliers, or unresolved employee issues
- Revenue that isn’t going to recur post-settlement — one-off contracts, expiring arrangements
None of these will necessarily kill a deal. Hiding them might.
What Happens If You Don’t Disclose?
If a buyer discovers after settlement that you knew something material and didn’t tell them, they have real options.
Rescission: The court can unwind the sale. The business returns to you — potentially in worse condition — and you return the purchase price. This is the remedy available in SA and VIC for failure to provide mandatory disclosure documents, but courts can also award it in common-law misrepresentation cases.
Damages: The buyer can sue for the difference between what they paid and what the business was actually worth given the undisclosed information. These claims are calculated differently depending on whether the action is under the ACL or contract law, but either way you’re exposed to a significant bill.
Misleading conduct claims under the ACL: These are strict liability in effect. The buyer only needs to show that your conduct was “misleading or deceptive” — not that you intended to deceive. Silence can be misleading when the circumstances create a reasonable expectation that you would speak.
The risk doesn’t end at settlement either. Most business sale contracts include a warranty period — typically 18 to 24 months — during which the buyer can make warranty claims for breaches they discover. This connects directly to disclosure: things you knew pre-sale but didn’t disclose can come back as warranty claims post-settlement, on top of any misrepresentation exposure. The warranties and indemnities section of your sale contract is where this risk lives.
The Disclosure Documents You Actually Need to Prepare
For a properly run sale process in the $2 million to $20 million range, disclosure typically happens through three documents.
Information Memorandum: The primary disclosure document in any structured sale process. It covers the business overview, financial performance for three to five years, customer analysis, key contracts, staff structure, and risk factors. A well-prepared information memorandum is simultaneously a marketing document and a disclosure document — which means it needs to be accurate, because you’ll be asked to warrant its contents in the sale contract.
Due diligence data room: Where the supporting detail lives. Contracts, leases, financials, employee records, supplier agreements, regulatory correspondence. You’ll warrant that the data room was complete and accurate as at the date of disclosure. A good data room isn’t just about giving the buyer what they ask for — it’s about creating a documented record that you disclosed everything material.
Disclosure letter: Used in larger or more complex transactions to carve out exceptions to the warranties the seller gives. If there’s a known issue — a disputed supplier invoice, an employee on a performance plan, a lease clause you’d rather the buyer didn’t focus on — the disclosure letter is where you note it explicitly. What’s in the letter is known by the buyer; what’s in the contract without being in the letter is warranted by you.
Doing vendor due diligence before going to market is one of the better investments a seller can make — it identifies disclosure issues before buyers find them, which keeps you in control of the narrative.
If you’re preparing to sell your business and want to understand your disclosure obligations and how they affect deal structure and value, talk to us. We work with business owners across Australia on transactions from $1 million to $100 million, and getting the disclosure framework right is part of what we do from day one.