Part 11 (Fees) & 12 (Expenses) – PAMD Form 21a: Business Brokers
What is the difference between Part 11 (Fees and Charges) and Part 12 (Expenses) of the PAMD Form 21a for business brokers?
Part 12 (Expenses) is to be used to specify any actual outlays that a brokerage will be making to 3rd parties on behalf of their client. Therefore, if the business broker is going to pay the Courier Mail $100 for an ad, that would be placed in this part. This would be like a law firm charging a client for a company search undertaken with ASIC to progress a matter.
Part 11 (Fees and Charges) is to be used for any fees or charges issued to the client by the brokerage that represents income for the brokerage. So if, for example, a fee is being charged for preparation of the Information Memorandum, this fee should be placed in Part 11.
This would be like a law firm charging a client a general fee for “sundries” at say 3% of professional fees as part of their account. Whilst the law firm may in fact incur photocopy charges as part of the sundries, it is not passing on an actual and specific cost to their client from a 3rd party.
Therefore, if as part of a marketing campaign the business broker was going to incur $200 in photocopying at Kwik Copy on behalf of a client, that expense should be inserted at 12.1.
Joe Kafrouni, Legal Practitioner Director, Kafrouni Lawyers
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