Business Law: Limited Partnership, General Partner, ASIC Investigation and Liability

This article discusses the rules and regulations related to limited partnership, general partner, ASIC investigation, and liability under the Business Law. It also covers the powers of ASIC to inspect books and gather information about audit.

Running head: BUSINESS LAW
Business law
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
Question 1
Part 3 of the Partnership Act 1891(SA) provides the rules which specifically deal with
limited partnerships. The specific section providing for the formation of a limited partnership
under the legislation is section 51. According to the section a limited partnership can be formed
upon registration under this part. Further section 49 provides that the structure must have at least
one limited partner and one general partner. In relation to the size section 50 states that the
partnership may opt for any number of limited partners, however the size must not be more than
what is mentioned in section 112 of the Corporation Act 2001 (Clarkson, Miller and Cross
2014).
Question 2
The most important feature of being a general partner is that they are “jointly and
severally” liable for the obligations of the partnership business including personal injury and
contract suits. Unless it is mentioned to the contrary in a partnership agreement, general partners
usually, share profit and losses of the partnership business in equal proportions. The general
partner has been identified as a person who is not to be taken as a limited partner with respect to
a partnership business. When the terms are not discussed in the partnership agreement, the law
of partnership as provided by the state legislation is applied in relation to a general partner. In a
limited partnership, it is compulsory that along with the limited partners there would be a general
partner as well. They have the express rights of carrying out the daily operations of the
partnership business (Glover and Doss 2017). The liabilities of the general partner also extend to
the personal assets of the partner and this it may not be a good of being a general partner. The

2BUSINESS LAW
general partner has an important role to play in the winding up of the partnership business under
the Partnership Act 1891 (SA).
Question 3
A limited partner is a member of the partnership business who does not have the right to
take part in the management of the business. The primary role of the limited partner is to fund
the partnership business with the required money. They have their liability limited to the amount
which they have invested the partnership business in case the business incurs any debts or
obligations in relation to it. However in a limited form of partnership if it is found that the
limited partner are taking active part in the management of the business, then they would be
liable to the debts and obligations which have been incurred by the business personally as stated
in section 65(2). However it is to be noted that a limited partner is NOT jointly and severally
liable for the actions of the other partners only in case they do not take part in the management of
the business. The limited partner has the right to verify the books of accounts of the business.
They do not have the right to prevent the admission of another limited partner into the
partnership business (Twomey, Jennings and Greene 2016)
Question 4
The general power of investigation has been given to the ASIC by the Australian
Securities and Investment Commission Act 2001 (Cth) under section 13. ASIC has the power to
conduct investigations in a way it thinks appropriate for the management of the Corporations Act
2001 (Cth). They can do so where there may be a suspicion that a corporation has committed a
breach of the CA and a breach of commonwealth or state law regarding the way in which a
company is managed and involving dishonest and fraud conduct in relation to a managed

3BUSINESS LAW
investment scheme or body corporate. In addition as per section 13(2) where the governing body
has any reason to doubt that there have been any circumstances of an unacceptable nature under
Subdivision B of Division 2 of Part 6.10 of the Corporations Act, it may take action to determine
whether or not an application should be made subjected to section 657C of the Act or the
administration of the CA. In addition where the ASIC has a reason to suspect that there has been
a breach of rules under Division 2 of Part 2, it has the right to make an investigation as required.
It has also the right to carry out investigations under section 14 of the ASIC if it they have been
directed to do the same by the minister. In the present situation there has been indentified that the
company had been involved in giving advice to a group of people who did not have string
financial background without considering the consequences of the advice to such people.
Section 1041E of the Corporation Act provides rules for a misleading and deceptive statement
Thus the ASIC has the power to investigate under section 13 of the ASIC Act 2001 (Kubasek et
al. 2015).
Question 5
In the given case study the issue which can be indentified is that the company had been
involved in giving advice to a group of people who did not have string financial background
without considering the consequences of the advice to such people. Section 1041E of the
Corporation Act provides rules for a misleading and deceptive statement. In this section it is
provided that a person should refrain from making a statement having a misleading and
deceptive nature to induce another person to subscribe for a financial product. In this situation
the directors of the company can also be held liable for violating their general duties as the
directors of the company. This is because they had the duty to work with due diligence and care
under s 180(1) and also to act for the best interest of the company under s 181 which they failed

4BUSINESS LAW
to do. They are liable under section 1317S to compensate the parties who have faced losses. Thus
it is clear that the directors have breach the CA. It is stated under section 5B of the Act that the
ASIC have been given the responsibility to managing affaires arising out of the Act. The ASIC
can initiate proceedings under section 49 against a party after investigation. In addition section
1330 of the Act empowers the ASIC to be a party to a legal proceeding which the case in context
is related to the breach of the CA. The ASIC can be a party to such proceedings also through the
appointment of any solicitor, person or body to be a part of the proceedings. Thus, in the given
situation as it is clear that Cassimatis have violated the provisions of the CA, the ASIC can take
appear in a hearing against them. They also have the right to directly being proceedings under
section 49 of the Act against Cassimatis.
Question 6
Under Division 3 of the ASIC Act 2001, the body has the power to inspect books and
gather information about audit. Under section 29 it is stated that the ASIC can inspect books of a
company without charge with respect to an investigation. They can provide a notice to produce
the books in relations to the operations of a company as under section 30. They can also provide
notice to the auditors with respect to the information in the book as well as the liquidator under
section 30A and 30B respectively. They can provide a notice to produce books which are
expressly related to financial products under section 31 and about financial services under
section 32A. Under section 33 of the Act the ASIC may provide notice to produce documents
under the possession of a person. Under this section a written notice can be provided to a person
by the ASIC asking to produce specific documents in relation to the way in which the affairs of a
company are conducted. They also have the right to authorize a person to ask for books and
information under the provisions of section 34. These powers can be exercised under section 29

5BUSINESS LAW
for executing the functions of the ASIC. As the investigation carried out by the ASIC against the
Cassimites is one of their functions and they require such documents to effectively carry out the
investigation function. They can ask for any document which is related to the way in which the
affairs of the company are carried out or how they provide financial products and services to
their client. They also have the power of issuing a warrant under section 36. They may also ask
where the books are and who had possessed them latest in case books are not provided (Kubasek
et al. 2015).

6BUSINESS LAW
Bibliography
Clarkson, K., Miller, R. and Cross, F., 2014. Business Law: Texts and Cases. Nelson Education.
Glover, W. and Doss, D., 2017. Business law for people in business. Austin, TX: Sentia
Publishing.
Kubasek, N., Browne, M.N., Dhooge, L.J., Herron, D.J., Williamson, C. and Barkacs, L.L.,
2015. Dynamic business law. McGraw-Hill Education.
Twomey, D.P., Jennings, M.M. and Greene, S.M., 2016. Anderson's Business Law and the Legal
Environment, Comprehensive Volume. Nelson Education.