Mary is the owner of a successful business selling women’s shoes. She seeks advice from her accountant to expand her business. Susan, the accountant, tells Mary that she has several options. Issue:
Recommendation for Mary, and influences to the advice.
Whether a public entity is the most appropriate entity for her mining venture. •
Should Susan incorporate? If so, should she adopt a company structure? •
Assuming Susan adopts a company structure, what type of Liability Company should Susan adopt? Relevant Laws:
Form of association:
Consider the possible form of association, corporate and non-corporate •
Consider comparative advantages and disadvantages of each form of association in the light of facts given. •
Remember that there can be many relevant factors, not all of them related to corporate law issues. Taxation stamp duty and human factors can also be important. Application
In this case, Mary as Sole trader, she wants to expand her business with a more appropriate structure. As a sole trader, Mary has unlimited type of liability. Beside, to transfer the ability of interest, it would be difficult for Mary because she needs new contracts with creditor. Thus, it appears that depend factors such as creditor or public, Mary might meet the difficulty to expand her business. Furthermore, Mary also can have advantages about loan and can employ others to help her as a sole trader. As for Susan, she would incorporate as partnership with Mary, can be written or oral and express or implied. As a partnership, she can adopt a company structure depend on the expansion of Mary’s company. Base on the current market, Susan can adopt many different type of Liability Company. For example, company limited by share or unlimited.
Scenario: Marcia does not register her company until she is over 18. She wants her company called “Marcia’s Guaranteed Sparkle Pty Ltd”. Issue:
Will Marcia be able to register the company with the name? if so how to ensure no one use it before she can. •
Is Marcia required to have a register office? If so can she use her parent’s house for that? •
Does she have to display the company name and/or ACN/ABN on her accounts or outside her parents’ house? Relevant Laws:
Company name: The Company’s name is chosen by the promoters and application can be made to “reserve” the name prior to lodgment of the application for registration of the company. Alternatively, the name may simply be the company’s ACN. The company names must also include words or abbreviations to show their type. •
Set up and maintain register of members, option holders and debenture holder. o
Maintain minute books of resolutions of directors and members o
Allow minute books and registers to be inspected
Comply with rules regarding the use of the ACN/ABN and company name. Application:
According to the law, Marcia will be able to register the company name. Furthermore, she can ensure no one will use it by register to reserve her company name. •
Marcia should have a register office. It could be her parents’ house •
She also needs to provide the company name and ACN/ABN.
Jasper is a qualified yet inept electrician, a sole director and shareholder of Burg-Go Pty Ltd (Burg-Go) which is specialize in installing burglar alarms. Along with his little success, he has several dissatisfied customers. One of the company’s customers, Patrick, reports about the alarm did not go off and let a burglar stole his priceless stamp collection. The police report confirmed that the burglar had not deactivated the alarm. Jasper realizes that the situation could be difficult so that he transfers the assets from Burg-Go to his new company called Stop-Burg Pty Ltd. After this transaction, Burg-Go is wound up. Patrick wants compensation for the loss of his stamp collection, but Burg-Go has no assets. Issue:
What possible legal arguments could...
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