Once the company is successfully registered, it becomes a separate legal entity which is different from its directors, owners, and shareholders. The company could have its own right and asset, and also property. Meanwhile, the money and resources of the company could only be used for business purpose. Even the directors can’t use the company’s asset for private uses. (Guides to obligations of proprietary limited companies 2012).
According to the case, the four people want to establish a company which specializing in coffee and coffee related accessories. What they invest in company is no longer belong to their own. They can get the company’s shares depend on their communication result. The money they invest in the coffee company only can use for the operation of the business.
One advantage to set up a company is when the company has debts, Shareholders of a company are not liable (in their capacity as shareholders) for the company’s debts (Guides to obligations of proprietary limited companies 2012). As shareholders, their only obligation is to pay the company any amount unpaid on their shares if they are called upon to do so. However, if a shareholder is also a director, the situation could be different. According to the case, the people who set up the coffee company each own 1000 shares at 2 at $2 a share and all shares are to be fully paid.
Normally, if the coffee company is in debt, the shareholders don’t need to pay anything because they all fully pay the shares. At the same time .Joan, Anna, Prafula and Susanna are the directors of the company, so the situation is complicated.
A director of a company may be liable for debts incurred by the company if the company is trading whilst it is insolvent. It depends on different situations. One situation is when any losses the company suffers from a breach of certain director’s duties, the relevant director of a company may be liable to the company In addition to having liability for the company’s debts or to pay compensation to the company, a director may also be subject to a civil penalty (Guides to obligations of proprietary limited companies 2012).
According to Corporate law 2001, section 148, the company may trade under its Australian company Number (ACN) or it may register a company name(Corporate Law 2001) When the directors have decided the name of the company, they need to register the name. Once the name is registered, it is protected by law.
All the limited companies must have “limited ;( “Ltd”) “proprietary limited” ( “Pty”); or “Pty Ltd” as part of their names (Corporate Law 2001).The directors want to set up a proprietary company, So the company name should include “Pty”.
(1) A name is available to a company unless the name is identical (under rules set out in the regulations) to a name that is reserved or registered under this Act for another body (Corporate Law 2001).
We use the search engine in ASIC website to check the name availability. The result shows us that the Leaping Lizard coffee is not available. It has been registered by another coffees Shop in VA. The company should think of another name to use for business.
(1) The company is aim to sell the coffee and relevant thing with high quality and reasonable price. Therefore, the company picks the quality coffee from all over the world.
(2) The company is willing to become a company that is socially responsible and environmental friendly. So the company strongly chooses the coffee which is certified.
(3) The company wishes to become an international company which has different son companies over the world. The company now is expanding now; the Malaysia could be first oversea market.
(4) The company rules and manages the company itself with high standard rules and regulation. The main rules could be the combination of a Constitution and the Replaceable rules.
There are few requirements that the...