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TLAW 202 Corporations Law Proof Reading Services
To determine the type of business organisation to be chosen by the family it is required to analyse the factors affecting its formation. Such factors may be regarded as the extent of control over the business, liability to be potentially held by each member, the tax specifications and the license requirements to get the business functioning. A company, for example, is considered to be the most suited business structure for the people running the business as it is flexible and facilitates easy functioning at the time of starting up a business. Such a structure is considered to be an entity separate from its owners as it is covered under the corporate veil. A corporate veil is considered to be a shadow over the company wherein the company functions as a person but is in fact non-living. The directors perform the functions in the name of the company. This allows the company to incur debt in its name just like a person. The liability for the owners however may be limited or unlimited depending on the type of the company the owners opt for. The shareholders with limited liability are only liable till the extent of the investment and not beyond it. It means that at the time of insolvency the people of the company are able to safeguard the personal assets. A company besides the liability may also be distinguished into two heads such as the private and public relationship. The responsibility to function is part of the director’s duties including the daily functioning of the company. The directors in turn shall be eligible and qualified to be the directors of the company. If the person is bankrupt or under age, he may not be the director of the company. A company is regarded as the most suited form of business structure but it is expensive to set up along with the complex reporting requirements.(Harris, 2013)
The business name is an important part of the company as it determines the identity in a given market. This would imply that the business name helps be unique from its competitors. When the company has decided on the business name it shall be registered with an ABN. The registration for the same is done at the registrar of the business names. However, when the companies decide on having their first or last name be the name of the business the same shall not require to be registered. If the family name is kept as the business name then it should not be registered. As per the facts of the given case study the name to be kept is different from the family name and thereby may have to be registered. The cost of registering a company is said to be $34 for a year and $80 for three years. The business name being one of its kind should not be similar to any other such business name held by another company. If the business name application is rejected it may be asked for the review.(Mitchell, 2011)
When the company is being formed the regulation rules are to be decided for reference of smooth functioning. The company is said to the governed by the constitution in precise that is formulated at the time of forming the company. If the company has no constitution then the replaceable rules are followed by the company provided under the Corporations Act. These are rules provided from the basic understanding and they help in smooth functioning of the business. When forming a company and registering it the share structure details of the same shall be provided for a proprietary company whereby only fifty non-member shareholders shall be present.
When forming a company it is required to decide on the registered office that may be registered and the same shall be considered a principal place of business management. The registration documents shall include the residential address of the shareholders, of the owners and cannot be post box. The registration changes shall be notified with a month. The private service providers undertake the registration of the company by managing the application submission and the fees for the ASIC. The same shall be filed with the ASIC and the registration forms shall be duly signed by the directors. The same registration form shall be of Form 201 that is filed with the ASIC. The authority may then decide whether the company shall be registered or not. After registration, ASIC may provide with the CAN and a certificate of registration.
Once a company is registered the body corporate is formed that may lead to perpetual succession bound indefinitely towards the membership. A common seal shall be present at the time of registration. The real and the personal property is subsequently transferred to the members and the trustees. The contract of association are carried forward as it is. The liability for the member’s debts is not the responsibility of the corporate but the debts drawn in the name of the company are the responsibility of the corporate. The payment’s so made to the members shall be made after the approval of the Commission. It may be excused if the payment is made for the work so reasonably done. After the company is registered the same shall be reviewed annually on the registration date. The annual review once done allows ASIC to release an annual report for the company and invoice statement. The annual review registration fees is also to be paid accordingly in terms of the scheme registration.(Stewart and Stuhmcke, 2012)
In the case CSR Limited V Young, it was observed that Mrs. Olsen had contracted mesothelioma from the blue asbestos that was exposed. The affect so contracted was from the exposure of the tailings so used in the construction of airports and golf course. It was provided by the Dust Diseases Tribunal that the company using the tailings had owed the duty of care to Mrs. Olsen. It was not the main function of the community but had been contracted from the usage in the parallel functioning of the community. The tribunal was of the view that Mrs. Olsen had owed a duty of care towards the employees as well as the society who would be affected from the tailings and capable of contracting cancer. The beach of duty is takes place whereby no warning is provided to the possible victims of the situation that is regarded as the foreseeable risks. It was determined that the company had breached the duty for not warning the residents of Wittenoom and awarded damages to Mrs. Olsen. It was further provided that the company have been governed by the corporate veil that could be pierced for CSR and ABA. This is because the parent company is responsible for the actions of the subsidiary company for the negligent behaviour. The Appellate Board decided that the damage in question was foreseeable by the party. The damages however were reduced by twenty percent for the damages caused to the plaintiff.(Tully, 2012)
Under the case of Smith, Stone & Knight Limited v Birmingham, the issue arising was the sale of the land rented by Birmingham as a tenant from the Smith Stone. The land was completely owned by the parent company and Birmingham was merely a tenant while functioning separately for the parent company. The compensation for the land thereby was not owned by Birmingham but Smith, Stone and Knight Limited. Th parent company has the right to claim for the disturbance so caused on the premises. The parent company being the only beneficiary and owner of the land would be entitled to compensation for the business of the subsidiary unit as the same is conducted on the behalf of the parent company.
Furthermore, it was provided from this case that the parent company is the principal and the subsidiary company is an agent of the parent company. Thereby, any business conducted by the subsidiary is performed for the benefit of the parent company that bears the risk of non-performance. The staff and the capital is contributed by the parent company making it a part of the parent company. To decide the role of the parent company factors such as the capital contribution, persons appointed, extent of ownership and governance over subsidiary and profits drawn are to be considered while analysing the role of parent company towards the subsidiary companies wholly or partially held for business.(Barker, 2012)
In the case of Creasey v Breachwood Motors Ltd it was determined that the Mr. Creasey had claimed for a wrongful dismissal from the Breachwood Welwyn Ltd. However, before he could make a claim for the same the company was ceased from operations and the assets were transferred to Breachwood Motors Ltd. to continue the business. This would be regarded as a corporate cover wherein the subsidiary company is shelved to avoid the liabilities. Although, the court ordered for paying off the debtors, Mr. Creasey could not gather any compensation as no resources were left. The appeal was thereafter filed to claim the compensation for the wrongful dismissal. It was determined that the Breachwood Motors Ltd were hiding beneath the corporate veil and the same had to be pierced in order to restore justice to Mr. Creasey. This is because the directors to the companies were the same and had not given importance to the legal identity regarding the same for the purpose of transferring the assets within the own entities. The decision was therefore, overruled by the Court of Appeal as it was identified as a situation whereby the company performs functions in order to create a façade that led to the breach of duties for the directors.(Stewart and Stuhmcke, 2012)
The case provided determines that Terry was an employee at CMS that was a subsidiary of CM. Cm leased out equipment to CMS for the mining purposes. However, CMS had been observed to have contaminated the nearby river that caused an affect of contraction of cancer for the residents as well as the employee of CMS. However, CMS had been sold to Lazarus Pty. Ltd. It may be observed that the CMS is a subsidiary of CM and thereby any liabilities for duty of care would lie with the parent company. If the claims are to be made, the same are to be made from CM as it was the parent company at the time the cancer was contracted. No claim for the liability of duty of care would be claimed from the CMS as it was regulated by the parent company and was responsible for its functions. As the duty of care was on the part of the CM for forseeing the possible harm and warning the residents as well as the employees t would be liable for not doing the same. The directors being the same for Lazarus Pty. Ltd. and CMS it would be considered as a façade to escape liability that would lead to breach of directors duties. The case being parent companies responsibility towards the actions undertaken by the subsidiary will apply. Therefore, Terry will be able to claim the same from CM directly.
Barker, K. (2012). The law of torts in Australia. South Melbourne: Oxford University Press.
Hanrahan, P., Ramsay, I. and Stapledon, G. (2012). Commercial applications ofcompany law. North Ryde, NSW: CCH Australia.
Harris, J. (2013). Australian corporate law. Chatswood: Butterworths.
Mitchell, R. (2011). Law, corporate governance and partnerships at work. Farnham, Surrey, England: Ashgate Pub.
Stewart, P. and Stuhmcke, A. (2012). Australian principles of tort law. Annandale, NSW: The Federation Press.
. Alphen International corporate legal responsibilityTully, S. (2012). aanden Rijn: Kluwer Law International.