Digger’s accountant has advised him that the company most suited for his needs is a no liability company. Do you agree with this advice? Answer:First issue here bearing in mind that the company is mining company. Whether or not a No Liability company would be suitable vehicle as the constitution of NL must be strictly for mining purposes. In NL Company could Digger maintain sole management and refuse to provide audited accounts. Bearing in mind that NL Company is public company and therefore accounts must be publish annually. Partnership is not an option for Digger because its investors excess 20 (s 115 (1)) where it has 40 investors which is double.There are two types of companies in Australia public and proprietary (s 112) which classifiedinto what sort of liabilities of members have to the company such as limited by shares; unlimited with share capital; no liability and limited by guarantee.
Question SevenMonty and Mary are the only directors and shareholders of Contrary Pty Ltd. Mary holds 60% of the shares and Monty has 40%. Mary decides she would like to convert the companyto On-side Ltd. Advice Mary over the following matters:(i)She hopes that the new company won’t have to pay the debts of Contrary Pty Ltd.To convert, must pass special resolution and lodging application with ASIC (ss162 and 163). However this does not create a new legal entity and does not affects any rights or liabilities of company. (ii)She wants to know at least five differences in the principal characteristics of the two types of companies.PtyLimitedRaising Funds Cannot raise funds from public Can raise funds from public Shareholders Maximum 50 Unlimited Directors s201AAt least 1 (at least 1 must reside in Australia)At least 3 – minimum 2 must reside in Australia AGMS249A – can pass written resolution without AGMMust hold AGM at least once a year Secretary No need Minimum 1 residing in Australia. WORKSHOP TWO QUESTIONS
Question OneSimon has decided he will register a company Cosec Pty Ltd and offer company secretarialservices. Before he is ready to register the company he searches for a suitable office andfinds a perfect location. Simon signs a 20 year lease under his name. He also signs a 2 yearrental agreement with a telephone company, signing on behalf of the proposed company. Before Cosec Pty Ltd is registered Simon gets offered an attractive sum of money to assignthe office lease over to another party. Simon takes the money and transfers the lease.Cosec Pty Ltd is registered and at the first directors’ meeting the ratification of Simon’stelephone agreement is considered. The directors opt for another telephone system thatthey consider better suited to the company’s needs. REQUIRED:(a)Discuss whether Simon breached any obligations by transferring the office lease.
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