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The Key Issues in Corporate Law

   

Added on  2020-04-01

11 Pages2509 Words161 Views

CORPORATE LAW2QUESTION 1ISSUEThe key issue in this case revolves around the steps which Richard and his sons are required to take for registering a company in the nation.RULEThere are different business structures which can be selected by people who want to start their business in Australia. Included in these are trust, partnerships, sole trader and company. The particular requirement of the individual helps in finalising which business structure suits the most to such person1. For instance, in the company form of business structure, there are numerous benefits like limited liability and the ability to raise funds from general public. The Corporations Act, 20012 is the governing act for all the companies in the nation and over the incorporation and registration of the company, this act has to be followed. Before starting a company form of business structure in the nation, there is a need to elect the type of the company which one needs to start. Under section 112 of this act, there are two types of companies which can be established and these are public and proprietary companies3. Under these categories, there are subcategories; for public companies, there can be unlimited public company with share capital, or no liability company, or company which is limited by guarantee, or lastly, the company limited through shares. The proprietary companies also have subtypes, but1Australian Government, Business structure (2016) <https://www.business.gov.au/info/plan-and-start/start-your-business/business-structure>2Corporations Act, 2001 (Cth)3Corporations Act 2001, s112

CORPORATE LAW3there are only two subtypes of it, the one in which the company is limited by share and the one inwhich it is unlimited with share capital. The proprietary companies in the nation do not have the power to sell the shares to the general public, which can be done by the public companies in the nation4.The next requirement for fulfilling the company’s incorporation is to select the name of the company. In this regard, certain key points have to be considered. As per section 147, no two companies can have identical names, so the name of the company has to be unique5 and for this purpose, the availability of name can be checked online. As per section 148 of this act, the company’s name can be finalized on the basis of the Australian Company Number or it can be done on the basis of the availability of name6. In addition to this, certain terms have to be affixed with the name of the company, to show the type of company. So a unlimited proprietary company needs to have in the end of the name of the company, the wordings “Proprietary”, a no liability company to have “No Liability”, and for the limited company, the wordings are “Limited”. And under section 152 of this act, upon the finalization of the name, an application needs to be made to the ASIC for reserving this name7.Under section 117 of this act, the application contents have to be filled by the applicants of the company with ASIC for applying for the company’s registration8. This application has to clearly state the members’ details, who are interested in holding such post in the company, the details of the company secretary, the consent of such individual, the type of company, the address and name of the proposed registered office, and the details of the shares.4Australian Institute of Company Directors, Organisation definitions (2016) <http://www.companydirectors.com.au/director-resource-centre/organisation-type/organisation-definitions>5Corporations Act 2001, s1476Corporations Act 2001, s1487Corporations Act 2001, s1528Corporations Act 2001, s117

CORPORATE LAW4After these steps have been undertaken, the next requirement is for the company to be managed either by replaceable rules or the constitution. Under Part 2B.4 of this act, the company has to be ruled by either of these9. Under section 141 of this act, the replaceable rules have to be applied for certain provisions. These rules are selected when certain the members of the company do not want to opt for a constitution as the ruling document for the company. Where a constitution is to be adopted, the company needs to adhere to section 136 of this act. The constitution can be selected, both before and after the company is registered10. In case the company adopts the constitution before registration, an agreement has to be provided with the members for the constitution terms to be put down in writing. There is a need for the special resolution to be filed when the constitution has to be adopted after the registration of the company11. Upon the finalization of which of the two is to be elected, the same has to be stated in the application basedon section 117 and the required fees has to be filed with it12.Some elements have to be covered under the application made to ASIC for it to be completed in every aspect and when such is done, the company is awarded the ACN, the company is registered and a certificate is issued which covers the details of the company like the type and thename of the company. As per section 119, the company comes into existence from the day it is registered13. The certificate of registration shows the company name and till deregistration of the company, it comes to exist under the eyes of law.Once the company is incorporated, the operations of the company can be initiated. However, the name of the company has to be displayed when the business of the company is conducted. The 9Corporations Act 2001, pt2B.410Corporations Act 2001, s13611ASIC, Constitution and replaceable rules (2017) <http://asic.gov.au/for-business/starting-a-company/constitution-and-replaceable-rules/>12Corporations Act 2001, s11713Corporations Act 2001, s119

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