TLAW 202 - Corporations Law - Assignment Questions

BLOCK 2 TRIMESTER 1 2018: TLAW 202 – CORPORATIONS LAW – ASSIGNMENT
QUESTIONS

Question 1
Answer: On account of the facts that have been given in this question, it is clear that some
advantages will be accessible to Richard and his sons in case they go ahead and incorporate a
corporation for the purpose of increasing their present trade activities. The reason is that it is
easier for a company to develop business as compared to sole trader business or partnership
business. It is true that the cost of registration of a corporation is higher in contrast with
managing the trade as a sole trader or as a partnership. But it needs to be noted that in the long
run, because that has been incurred on the registration of the company can be treated as running
business expenses. On the other hand, when the parties have decided to only register the business
name, it can be less expensive as compared to registering a company. But if the parties have
registered the company, there is no need for registering the business name. When a corporation
has been incorporated, the full name of the company begins with "Pty Ltd" has to be used. At the
same time, it is also necessary to regularly renew the registration of the business name. For this
purpose, a fee also needs to be paid to the administration. On the other hand, when the parties
have registered a company for running their business, the ASIC has to be paid an annual fee.
The major advantage related with the incorporation of a corporation is that the members of the
company have limited liability towards the debts of the corporation. Consequently, it has been
provided that after the registration of the corporation, its members are only liable to any sum
unpaid on the shares of the company held by them. But this advantage is not available to the
persons running their business as sole traders and partners (Sweeney, O’Reilly and Coleman,
2013). The reason is that these persons are treated by the law as being personally responsible for

all business responsibilities. Some other relatives are also available when the parties have
registered the company for running the business. For example, the rate of tax is lower in case of
companies. As a result, the persons who are running their business by registering a business
name have to pay income tax at the normal rate, but on the other hand, the registered
corporations in Australia have to pay a flat rate of tax. This rate is less as compared to the rate
applicable in case of individuals (Graw, 2011).
It also needs to be noted that in the eyes of law, a company is a separate legal entity. Due to this
legal fiction, the company has the authority to whom property under its own name. Similarly,
context can be created by the company in its own name. Therefore, it becomes clear that
according to law, a company is distinct from its members (Latimer, 2016). Before going through
the steps required for registering a company in Australia, it also needs to be determined if the
business structure of a company will suitable for the parties in the present case. At the same,
Richard and his sons have to decide the business sector will be most suitable for expanding their
business. For the purpose of making this decision, it is necessary that all the available options are
considered by the parties (Vermeesch and Lindgren, 2011). In the present case, a successful
business is being run by Richard. It is expected that his sons, David and Liam will also be joining
the business. Under the circumstances, they are willing to expand their business. In order to
achieve this objective, they have to select the business sector that will prove to be most suitable
for them. After considering the facts of this question, it is clear that the business structure that
allows them to raise finances easily, that are required for growing the business will be most
suitable for them.
Another issue also exists in this question. While Richard wants the corporation name to be
"Ridali", his sons want that the business should be named "Rich's Guaranteed Olives". It is worth