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CORPORATE LAW2Answer 1I: IssueThe key issue which can be inferred from the case study is the process which has to be followedby Richard and his two sons for registering and incorporating the company.R: RuleThere are a number of business structures which can be followed by the prospective businessrunners in the nation. Amongst these, the key one is a company form of business structure,which has perpetual succession, unlimited liability, can raise funds from public and has acomplex setting up process(Australian Government, 2016).The Corporations Act, 2001 (Cth) isthe governing act in Australia, which covers different provisions including the incorporation andregistration of the companies. When an individual makes a decision to go forward with acompany sort of business structure, the very first decision which has to be made relates towhich type of company one needs to opt for. This is because under section 112 of this act, anindividual could opt for either a proprietary company or a public company. These two arefurther divided, where a proprietary company can be either limited by shares or be unlimitedwith share capital. On the other hand, a public company can also have these two forms, alongwith being a no liability company and limited by shares(Australian Government, 2017). A keydifference between the two types of companies can be inferred from the fact that the publiccompanies can raise shares from general public, but the proprietary companies can only raiseshares from their acquaintances, friends and families, and not from the general public(Australian Institute of Company Directors, 2016).Once the decision on the type of the company has been undertaken, the individuals have tomake a decision on the name of the company. The availability of a particular name of thecompany can be checked online. Under section 147 of Corporations Act, the companies canfreely chose any name, so long as it does not clash with the name of an existing company as aper-existing name cannot be given to another company. The rationale behind this is that on thebasis of the name of the company, the company can sue or be sued by others. Under section
CORPORATE LAW3148, the requirement is given that the name of the company to be formed can be selected onthe basis of availability or on the basis of the ACN of the company, which stands for theAustralian Company Number (Australian Government, 2017).The company’s name shows the kind of company it is as the name is affixed with certain termsdenoting the same. So, for a company having no liability, the words “No Liability” would bestated at the end, and for the limited company, the term would be “Limited” at the end of thecompany name(Department of Industry, Innovation and Science, 2016). Once the name of thecompany has been shortlisted, section 152 requires an application to be made to the AustralianSecurities and Investments Commission, or short for ASIC, so that this particular elected namecan be reserved (Australasian Legal Information Institute, 2017).Section 117 of this act provides that the application which is submitted to ASIC should havecertain details like the name and details of the members, the address of the registered office ofthe company, the share details, and the like (Australian Government, 2017). Upon the ASICbeing satisfied that the required items are covered under the application, pursuant to section118 of this act, the ASIC provides the company with the ACN and the company is registeredpursuant to which a certificate is issued in which the name, the type and the ACN is covered.And section 119 provides that the day on which the company is registered, becomes the day ofits inception. And till the company is de-registered, the company exists (Australasian LegalInformation Institute, 2017).The next decision relates to the choice between constitution and replaceable rules. Replaceablerules are covered under section 141 of this act and are applicable on certain specifiedprovisions only. Hence, mostly, a constitution is opted, which is covered under section 136 ofthis act. The constitution can be adopted before or after the company is registered. But whereit is adopted afterwards, there is a need for a written agreement to be formed which states thata constitution is being adopted and there is also a need of special resolution (ASIC, 2017a).When the application is filed with ASIC, section 117 dictates that the application needs toclearly specify between which two of the governing instrument is being adopted.