Coporation and Busines Structure

COPORATION AND BUSINES STRUCTURE
Student’s Name
4/13/2020

Masters of Law 1
Contents
Part A.................................................................................................................................2
Background........................................................................................................................2
“The costs, administrative and regulatory burdens”..........................................................2
“Potential liability to third parties”.......................................................................................4
“Fiduciary duties owed by business owners”.....................................................................5
“Recommendation”............................................................................................................7
Part B.................................................................................................................................8
Bibliography.......................................................................................................................9
Legislation......................................................................................................................9
Case laws.......................................................................................................................9
Books/Journals...............................................................................................................9
Other Resources............................................................................................................9

Masters of Law 2
Part A
Background
The report is prepared for Mariana, Ted and Greta., who are potential clients of the
firms. They have concern related to the business structure and suitability where cost,
administrative burden, liabilities of partners will discussed. The report presented hereby
is address to senior executive and is not address to clients.
“The costs, administrative and regulatory burdens”
Whenever a business starts, it attracts some cost and administrative burden to the
owners. This cost and regulatory burden vary as per the structure of the business. This
part of the report is focused on such cost and administrative burden of partnership and
corporation structure. Firstly, to discuss the case of partnership this is to state that the
cost, as well as a legal requirement, is less than the corporate structure. Australian
business number is a primary requirement to form a partnership business1. It is a unique
number for firms that need to mention in every business transaction of the firm. Another
requirement, which needs to fulfill while the formation of partnership is the execution of
the partnership agreement. This agreement can be executed orally too. However, to
give a legal and more valid touch, parties should develop an agreement in the written
mode. A partnership agreement is a legal document that determines mutual terms and
conditions of the firm's owners i.e. partners, such as their profit sharing ratio, capital
contribution, rights and liabilities of partners2. Sometimes, firms want to register their
business name for the security of the firm's interest and identification. In such a case,
there is an additional requirement of business name registration, which is not a very
complicated process. Australian Government provides electronic business registration
services. Authority does not register a business name permanently but partnership firms
may do so for either one year or three years. Businesses have to pay $34 for one-year
1 ato.gov.au, Partnership (Australian Government) <https://www.ato.gov.au/business/starting-your-own-
business/before-you-get-started/choosing-your-business-structure/partnership/>.
2 Jean Murray Why Your Business Partnership Needs a Written Agreement, (Small Business) <
https://www.thebalancesmb.com/why-your-partnership-needs-a-written-agreement-398401>.

Masters of Law 3
registration and $80 for three years3. It is advisable to get a registration of three years
as is comparatively cost less to firms.
At the time of the expiry of this registration, the same may be renewed by paying the fee
as similar to a new registration. Apart from the setup cost and formalities, firms do not
have any other regulatory burdens. As it is a close business structure, firms are not
liable to submit details related to financial statements or details related to business
activities to any authority. However, tax-related details need to be submitted to the
relevant authority.
On the different side, corporation business structure demands a higher cost and
regulatory burden. Registration of a company in Australia is a lengthy process where
seven steps are involved4. The registration of an Australian company can be pursued
through the online structure offered by ASIC. Firstly the company name is required to be
registered with ASIC that costs $50. If the promoters do not have a name for their
company then the Australian company number can be used as a company name. Once
the name is registered, promoters of the company need to decide the manner of
working in the potential company as well as some other matters such as prospective
directors and members of the company, address of the registered office and principal
place of business. After doing this, the registration form needs to be submitted with
ASIC in addition to the applicable fee. This application fee depends on the nature of the
company. A proprietary limited company can be formed by paying $4955. A company
can conduct business via business name. Charges for business name registration are
$36 for one year and $85 for three years. Renewal of business name registration is a
regulatory requirement for corporations.
There is some regular compliance in the case of a corporation. Firstly, changes in
directors/officers, registered office address and principal place of business are need to
informed to ASIC in a time-bound manner that is 28 days. Proprietary limited company
3 legalite.com.au, Business Name (legalite) <https://legalite.com.au/whats-in-a-name/>.
4 asic.gov.au, Steps to register a company (ASIC) <https://asic.gov.au/for-business/registering-a-
company/steps-to-register-a-company/#registering-company>.
5 ecompanies.com.au, What is a PTY LTD Company (ecompanies)
<shttps://www.ecompanies.com.au/company-registration/pty-ltd-registration/>.