Company Law Name of the Student Name of the University Author note a Issue

Running head: COMPANY LAW
Company Law
Name of the Student
Name of the University
Author note

1COMPANY LAW
Question a
Issue
In this scenario, the issue related is whether Martha can establish a company with one
person being in control.
Rule
As per the Corporations Act, 2001, a company can be separated from its members.
The concept of separate legal entity defines such a situation. An entity or an organization is
treated to be as an artificial person and is distinctive from the members. This rule or law has
been well established in a renowned case of Salomon v A Salomon and Co Ltd [1897] AC
22. A company can sue and be sued separately. The members, directors and shareholders are
said to be separate from the companies. In the case mentioned above, the issue of this was
whether a shareholder can be held liable for the debts incurred by the company. It was
observed in this case that Salomon had transferred his business from a sole tradership to a
company and incorporated with the members of the members. Thereafter, when the business
of the company did not succeed and went into liquidation, his right to recovery against the
debentures stood to the claims of the unsecured creditors. Salmon was the principal and was
therefore held liable for the debt personally. Thus, the liquidator had over looked the matter
of separate legal personality of Salomon Ltd from the debts of the company. The concept of
corporate veil will also be applicable in such a situation as a company is said to have a
separate personality from the identity of the existing members and shareholders. A company
is generally formed and registered based on the provisions of the Corporations Act 2001. For
the formation of the corporation, registering of the company is necessary with the help of
articles of association and memorandum of association. A company being a separate entity

2COMPANY LAW
can own a property, make investments, assume obligations and rights and execute the
contracts.
Application
As observed from the law and case study, it can be stated that Martha, Gus’s wife can
form the company called MyCar Co Pyt Ltd and become the only director of it. As per the
Corporations Act 2001, incorporating a company is referred to as the legal process. The
process of separate legal entity is used during the formation, as it is distinctive from its
owners having its own rights and obligations. A company can be in the form of a sole
tradership instead of a company with various members. Martha had decided to make Gus her
only employee. However, both Martha and Gus will be separate entities from the company
formed by them. Therefore, if the relevant rule or law of Corporations Act 2001 is applied,
then the registration process needs to be fulfilled. The process of registration includes name
clause, object clause, capital clause, memorandum and articles of association as per the above
mentioned act. Being the sole trader, Martha will be able to establish the company by going
through the process of registration and operating within the rules of it.
Conclusion
It can be stated by concluding that Martha will be successful in establishing the
company and controlling it being the sole trader.
Question b
Issue
The concerned issue of this case is whether Gus is breaching the original contract and
the argument of Acme related to the business.