LAWS20059 Corporations & Business Structures Assessment Answers

 

Assignment Detail:-

• Number of Word: 2000

 

 

ASSIGNMENT INSTRUCTIONS

 

Background facts

After graduating from your business degree at Central Queensland University you recently commenced working at a professional consulting services firm called “Top Consulting” in the State or Territory in which you are undertaking your studies. You work in the legal compliance team and utilise your knowledge of commerce and law acquired from LAWS20059 to advise a diverse range of clients. You specialise in advising clients on how Australian law governs business structures in the operation of commercial activities.

 

You are approached by Tom, Raj and Sulin. They attended the same high school and remained friends despite going to different universities and studying different degrees. Tom has an accounting degree and works for a small accounting firm. Sulin has a degree in horticulture and currently works for the government whilst Raj works for a real estate firm. Tom, Raj and Sulin want to leave their jobs and start their own business. They want to pool their resources, experience and skills into starting up and running a nursery business – Raj owns property that can be converted into a nursery whilst Sulin can utilise her horticultural knowledge to advise clients on the plants. Tom will be responsible for the finances utilising his accounting skills. Both Sulin and Tom have $100,000 each which they will contribute to the business. Raj will contribute the property he owns.

 

They want to call their nursery “Garden of Eden”. Since Sulin will be working the most at the nursery they agree that she would receive 40% of the profits, Raj and Tom would each receive 30% of the profits. They would like to keep costs as low as possible, but Raj and Tom are also concerned about protecting their personal assets from creditors. Raj has several investments properties and Tom has a small inheritance from his grandfather who recently passed away. For Sulin, personal liability is not an issue at present but she and her husband are saving money to buy a house. Tom, Sulin and Raj also want the flexibility of expanding if the nursery business is successful and they want to use a business structure that would allow them to raise more capital to fund the expansion. Tom, Raj and Sulin organise a meeting with your firm because they have a number of questions about different business structures.

 

Part A – Business Structures

 

To prepare for the client meeting your supervisor, Mary, asks you to write a report which:

 

1. Identifies three relevant business structures used in Australia, and compares and contrasts the similarities and differences between those business structures. You must refer to relevant legislation and cases in this section of your report.

 

2. Advises and recommends which business structure is most appropriate for Raj, Tom and Sulin, taking into account their needs and concerns. Your recommendation must be justified.

 

3. Advises the practical steps required to set up the business structure recommended in (2) above. You may need to refer to relevant legislation in this section of your report.

 

Part B – COMPANIES AND INCORPORATION

 

Assume Raj, Tom and Sulin decided to use a company structure, and they call their company Garden of Eden Pty Ltd. Garden of Eden is doing very well and is turning a healthy profit. The Garden of Eden enters into a contract with a company  for the supply of plants  to the company for a  total cost of $5000. Garden of Eden delivers the plants to the company but the company has not yet paid the $5000 to Garden of Eden. Tom knows one of the directors of the company, Stan and he also knows one of the shareholders of the company, Susan. Advise Garden of Eden if it can sue (a)Stan or (b) Susan personally to recover the $5000. Refer to relevant cases and/or sections of the Corporations Act 2001 (Cth) in your answer.

 

The Garden of Eden also decides to expand by acquiring a new property to develop into a second nursery. The Garden of Eden approach Sam, the owner of the property, and sign a contract to purchase the property for $1million. However, a few weeks after signing the contract, Sam changes his mind and decides not to sell the property to the Garden of Eden. Sam sets up a company called SS Pty Ltd and transfers the property he is supposed to sell to Garden of Eden to SS Pty Ltd. Sam is the sole director and shareholder of SS Pty Ltd. When Garden of Eden finds out what Sam has done, Garden of Eden threatens to bring legal action against Sam or SS Pty Ltd to recover the property. Sam informs Garden of Eden that they will not be successful because the property does not belong to him anymore but that he is happy to pay damages for breaching the contract with Garden of Eden.

 

Advise Garden of Eden if it will be successful in its action to recover the land. Refer to relevant cases and/ or sections of the Corporations Act 2001 (Cth) in your answer.

 

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