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Corporations Laws - Assignment

   

Added on  2021-05-30

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Running head: ASSESSMENT 21Assessment 2Wentworth InstituteSPA233 Corporations LawDate

ASSESSMENT 2 2Assessment 2Topic 1Response to Topic 1There are two fundamental legal concepts that govern registration and incorporation ofcompanies. First is the concept of legal personality and last is the concept of limited liability.Under corporate personality, a company has a distinct and separate identity from its members orowner in case of proprietary company (Sealy & Worthington, 2013). By registering a proprietarycompany, an individual manages to separate personal liability from company’s liability. Underthe law, a proprietary company has a distinct legal personality separate from its owner(Anderson, 2009). A business in the form of a proprietary company is more desirable because itlimits the liability of the parties. Structuring the commercial enterprise in the form of a proprietycompany will give the venture a distinct legal personality. In this light, the distinct legalpersonality protects the shareholder from any liability borne by the company. It is easy to register a proprietary company. First, one need not use a constitution. Theconstitution of a corporation governs the formation and operations of a company. Before 1998,the corporations Act required companies to use constitutional documents during registrations.Currently, the constitution includes both a memorandum of association and articles ofassociation. Thus, the constitution is a document that communicates the legal intent of parties toincorporate a company and own shareholders’ rights after financing the share capital (Lowry &Dignam, 2008). The same outlines the management and ownership structure of a company. Inaddition, the constitution provides for the rights and duties of the management, rights, andresponsibilities of the shareholders, liability, administration of shares, and dividend policyamong others.

ASSESSMENT 2 3Another issue to consider is taxation with respect to profits accruing from the operationsof the trade. The dividends of shareholders are not subject to taxes while profits from personalbusiness are subject to taxes. Channeling the profits of the company to expanding the businesswill lower the share capital thus substantial lower taxes.In registering a proprietary company, one of the most important steps is filling in form201. Form 201 is a statutory standard form for the incorporation of a company. On returning thefilled form 201, schedule 2 of the Corporation Regulations requires one to pay the registrationfees. The fees depend on the share capital involved. In this case, the payable amount is 426dollars.Topic 2- Types of CompaniesDifferences between a proprietary company and a public companyUnder Australia’s Corporations Act, there exists two main types of companies. Thus, onecan either incorporate a proprietary company or a public company (Corporations Act 2001).Under section 45A (1), the Corporations Act provides for proprietary companies. The basicdifference between a proprietary company and a public company lies in the structure ofgovernance and raising of capital.Given that a proprietary company is barred from raising capital through issuingprospectus for sale of shares, it does not deposit its constitution with the Australian Securitiesand Investments Commission (ASIC). The prohibition is captured by Section 113 (3). However,a public company must deposit its constitution with ASIC. According to Section 136(1) of theCorporations Act, the members of the public company must consent in writing to the constituentsof the constitution. Of note, a company need not have a constitution at the time of registration.

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