Minister for Transport and Communications

Running head: CORPORATE LAW
CORPORATE LAW
Name of the Student
Name of the University
Author Note

CORPORATE LAW1
Question 1
Issue
The primary issue in the given scenario is that what business structure shall be most
suitable and adequate to Khan Chan and DJ_PP in relation to their business of high risk nature.
Rule
When an individual decides in relation to a particular structure of business, then that
particular individual must consider certain factors thoughtfully and very cautiously. These
factors may include required license, payment of tax, probable private liability or accountability,
control regarding business and ongoing costs. The four distinct structures in relation to business
are namely, partnership, company, sole trader and trust.
The structure of business in relation to a company is complex and multifaceted. A
company enjoys a separate legal existence from its members. Company is considered as a
distinct legal personality. Due to such feature of a company, the members in relation to a
company enjoys the policy of limited liability. In this regard, the case of Salomon v A Salomon
and Co Ltd [1897] AC 22 shall considered to be a relevant case. In this case, it has been
mentioned that distinct legal personality is the most rudimentary feature on which the law
relating to corporations is based.
The structure relating to partnership business is much simpler. Two or more individuals
may get together to give effect to a business and these individuals shall allocate the losses and
the profits among themselves either in an equal manner or as per the terms agreed upon by the
partners in relation to the business. However, in the case of partnership the partners shall be

CORPORATE LAW2
privately accountable in relation to any kind of liabilities. The case of Wang v Rong [2015]
NSWSC 1419 shall be considered to be a relevant case in this regard. In this case it was held by
the court that the three partners were considered to be equally and strictly liable or accountable in
relation to their Partnership.
Application
In the given scenario, Khan Chan and DJ_PP should consider factors that may include
required license, payment of tax, probable private liability or accountability, control regarding
business and ongoing costs.
The case of Wang v Rong [2015] NSWSC 1419 shall be applied in the given scenario in
case of partnership structure regarding business. The case of Salomon v A Salomon and Co Ltd
[1897] AC 22 shall be applied in the given scenario in case of company structure regarding
business. If the business of Khan Chan and DJ_PP is of high risk nature, then the company
structure shall be more suitable in relation to their business. The company structure shall be more
suitable because the liability or the accountability of Khan Chan and DJ_PP shall be limited in
this kind of structure regarding business.
Conclusion
In the conclusion, it may be said that the company structure shall be most suitable and
adequate to Khan Chan and DJ_PP in relation to their business of high risk nature.