Different forms of business structures

Describe about the Report for Fundamentals of Law and Corporations Law.

1. In order to make the advice to Robert and Vanessa regarding the structure of their business, there has to be the detailed discussion regarding the different forms of business structure that is the partnership, company, and trust.

The definition of partnership form of business emerges or is formed in those cases where there are more than two persons to start any business together. The maximum limit of persons to start a partnership business is twenty persons. The partnership form of business exists in two forms. Any business of partnership can be either limited or general. There are several factors that exist in a partnership business[1]. Those factors and elements are as follows:

There must be the definition of the duties of the partners in the deed of partnership from the beginning of the partnership business. The responsibilities of the partners of any partnership business must be stipulated in the deed of partnership.

The golden rule of the partnership is that in the case of any disputes that are in relation to business should not be brought or related with the family unit of any partner.

There is the personal liability in case of partnership business.

The next form of business structure is the company form. In a company, the shareholders are the owners of the company and the directors are the administrators of the company. But in the case of a company of independent contractor or one person company, there is only one person who acts as the member, director, and shareholder. The company can either be the private company or public company. the public company refers to those companies of which the public can make the purchase of the shares in order to make the investment in the company. The primary purpose of any company is to conduct business[2].

The primary responsibility or obligation to any shareholders of any company is limited up to the face value of shares that is held by him or her in that company. There is the responsibility of the directors to conduct the proper administration in the company, and they are answerable to all the shareholders of the failure and success of the company. Though the shareholders hold the majority of the shares in any company, they have the power to dismiss any directors, but such dismissal shall be based on the operations control of the company[3].

Partnership form of business

In the recent years, it has been seen that the director of any company is unable to avoid the issue of guarantee of directors to the creditors. The issue of the guarantee of the directors as that director honoring the debts of the company in personal terms, in case the company fails to acknowledge the same. In the case the company fails to make the payment of its debts the creditors possess the right in winding up and liquidation of the company[4].

Any company is considered as a separate entity from its owners. Any company has a perpetual succession. It means that any company enjoys continued existence. It also states that any member may come and go but company continues to exist. Any company has a limited liability. A company has its own common seal. Any company has the right to sue and the right to be sued. Any company has also the right to make the purchase of any property in its name.

The third form business structure is trust. The term trust refers to a legal entity that is specially designed to make the protection of the interests of any persons who are known as beneficiaries. In order to make the creation of any trust, any person put down any sum of money. Such person is known as the settler. The obligations of any trustee are that the make the assurance that the best interests of the beneficiaries are subject to be addressed. Any trust must include minimum one person or entity to possesses to make the hire, replace or fire the trustee in such event of death or sickness. This person or entity is referred to as the appointer. The said trustee can be any person who is of the legal age that means that such person must have attained the age of eighteen years[5].

Based on the above discussion, the business structure that can be suggested or advised to Robert and Vanessa is that of partnership. It is because the partnership form of business will be the most suitable for the two persons considering their form of business. In the initial years they can start with the partnership form of business but late on they can shift to the company form of business for the purpose of enlarging their business.

2. In the Corporations Act of 2001, there are the rules that are stipulated in that are to be followed by any company at the time of its formation and also at the time of its winding up. In the section 124 of the Corporations Act of 2001, there has been the express stipulation of the legal capabilities of any company. In the section subsequent to section 124 of the Corporations

Act that is Section 125, the Constitution of any Company can limit the powers of its members and may also set the objectives or the aims of any company[6].

Company form of business

Section 125 makes the express stipulation that in case any company has any constitution, there may be an express restriction or prohibition on the exercise of any powers of any company. The exercise of any power by any company is not considered as invalid as the power is restricted by the constitution of that company. It has also been mentioned in the same section that if any company has any express constitution, then such constitution may set out the objects and the aims of any company. Any act of a company shall not be considered as invalid simply because it stands in contrary beyond the objects that are specified in the constitution of any company[7].

In Section 124 of the Corporations Act of 2001, there are specified the capacities in the legal sense of the term. The section grants the powers to the companies or corporations the power to make the issue of shares, debentures. It also grants the options to any company to take the decisions regarding the shares that are unissued. It also grants the companies to issue a security interest to any capital that is uncalled[8].

In the given case, there has been the decision taken by Robert and Vanessa to make the registration of a proprietary company that is limited by shares. In making the registration there has been the constitution framed by them that highlights four primary powers. The four primary powers in the constitution are discussed below in details.

The first power in the constitution is that the Company will be engaged in a business that will be related with the extraction and selling of the fungal products that are fungal in nature from Amanita. In the beginning of the case study provided, it has been provided that Robert and Vanessa is interested in the mushroom field of mushrooms. They made the discovery of a new species of mushrooms known as Amanita. Such species is related to stop or prevent the aging among women. Hence, they wanted to set up their own business set up for doing the business of such species of mushrooms. In accordance to that, they set up the constitution of the company in order to register the same as a proprietary company. As it is mentioned in the constitution of the company, the company shall be entitled to indulge in such business that is related with the selling and extraction of fungal products from Amanita[9].

Trust form of business

The second power that is mentioned in the Constitution is that the Company shall make the appointment of an accountant named Bill and shall remain in that post unless he makes the decision resign. In simpler terms it means that the company shall not remove Bill from the post of accountant until he resigns unless anything contrary happens[10].

The third clause that is prescribed in the Constitution of the Company is that the same shall not be amended unless all the member agrees to such amendment. It means that the amendment of the constitution shall not be done without the consent of any of the members unless such amendment is required in an immediate basis[11].

The fourth clause of the Constitution states that any contract that is over the value of over dollar twenty-five thousand shall require the signature and approval of either Vanessa or Robert. In simple terms it means that when any contract is entered into by the company the signature and approval of Vanessa and Robert is not necessary. But if any contract exceeds the consideration amount of dollar twenty-five thousand, there would be the requirement of the approval and signature of Vanessa and Robert[12].

In the given case, the primary issues that are involved in the given case is that whether Bill, the accountant appointed by the company of Robert and Vanessa would be held liable for making the purchase of a software related with accounting for an amount of dollar thirty thousand. The second issue that is involved whether Robert and Vanessa is entitled to make the payment or accept the software that is purchased by Bill[13].

In the given case, the general principle of contract or contract law applies. The law of constitution in cases of companies also applies. It is provided in Section 125 of the Corporations Act of 2001 is that in case any company has any constitution; there may be an express restriction or prohibition on the exercise of any powers of any company. The exercise of any power by any company is not considered as invalid as the power is restricted by the constitution of that company. It has also been mentioned in the same section that if any company has any express constitution, then such constitution may set out the objects and the aims of any company. Any act of a company shall not be considered as invalid simply because it stands in contrary beyond the objects that are specified in the constitution of any company[14].

Suitable form of business structure for Robert and Vanessa’s business

It is an established principle in the law of contract that if any contract exists between two parties then the parties should act in accordance to the contract. In case any party fails to act in accordance to the contract then such failure shall be regarded as the breach of contract. The breach of contract by any party renders the other party the opportunity to sue him or her in a suit for breach of contract. In case of breach of contract by one party, the other gets opportunity or right to make the specific performance of the contract or sue for damages or compensation[15].

In the given constitution of the company, the second clause provides expressly that the accountant Bill shall stay in the post of accountant unless he resigns. In the same Constitution in clause four, it has been mentioned that any contract of the amount of dollar twenty-five thousand requires the approval and signature of either Vanessa or Robert. Hence, Bill has breached the established rule in the company. If there exist any contract where Bill is entitled to purchase the accounting software, then Vanessa and Robert would have been bound to accept the purchase. In the absence of the same, the company shall be governed by the rules prescribed by the constitution. Bill should have approved and taken the signature of Vanessa and Robert before entering into the contract of making the purchase of accounting software. Hence, the fact of accepting the accounting software is at the option of Vanessa and Robert[16].

Conclusion      

In the conclusion, it can be said that Vanessa and Robert may or may not accept the software related to accounting.

Reference List

“Recognition of foreign administrative acts: Report from Australia to the XIXth International Congress of Comparative Law.” (2014).

Bentley, Karen, and Adam Denley. “Isolated nucleic acids are patentable-what does the Myriad decision in Australia mean for patent applicants?.”Australasian Biotechnology 23.3 (2013): 53.

Boyle, Liam. “An Australian August Corpus: Why There is Only One Common Law in Australia.” Bond Law Review 27.1 (2016): 3.

Chen, Vivien, Ian Ramsay, and Michelle Anne Welsh. “Corporate Law Reform in Australia: An Analysis of the Influence of Ownership Structures and Corporate Failure.” Australian Business Law Review 44.1 (2016): 18-34.

Crockett, Michael, and Muhammad Jahangir Ali. “Auditor independence and accounting conservatism: Evidence from Australia following the corporate law economic reform program.” International Journal of Accounting & Information Management 23.1 (2015): 80-104.

Evans, Alan W. “2014 Board strategy workshop.” Governance Directions66.8 (2014): 464.

Constitution of a proprietary company limited by shares

Floyd, Louise, and Michael Evan Gold. “Jimmy Hoffa: Alive, Well and Living in Australia? The Kennedy Legacy and Australian Labor Law Reform.” The International Lawyer 49.1 (2015): 21.

Hiller, Janine S. “The benefit corporation and corporate social responsibility.”Journal of Business Ethics 118.2 (2013): 287-301.

Johnstone, Richard. “Work health and safety and the criminal law in Australia.” Policy and Practice in Health and Safety 11.2 (2013): 25-44.

Kirby, Michael. “Unmet needs for legal services in Australia: Ten commandments for Australian Law Schools.” Law in Context 34.1 (2016): 115.

Lynch, Amanda H., et al. “The role of the Yorta Yorta people in clarifying the common interest in sustainable management of the Murray–Darling Basin, Australia.” Policy Sciences 46.2 (2013): 109-123.

Meek, Paul, and Des Butler. “Now we can ‘see the forest and the trees, too’, but there are risks: camera trapping and privacy law in Australia.” Camera Trapping: Wildlife Management and Research (2014): 331.

Sheehy, Benedict. “Defining CSR: Problems and solutions.” Journal of Business Ethics 131.3 (2015): 625-648.

Turton, David J. “Unconventional gas in Australia: towards a legal geography.” Geographical Research 53.1 (2015): 53-67.

Walker, Gordon, et al. “Commercial Applications of Company Law in New Zealand.” COMMERCIAL APPLICATIONS OF COMPANY LAW IN NEW ZEALAND, CCH New Zealand, Auckland, (2012).

Willmott, Lindy, et al. “(Failed) voluntary euthanasia law reform in Australia: Two decades of trends, models and politics.” University of New South Wales Law Journal, The 39.1 (2016): 1.

[1] “Recognition of foreign administrative acts: Report from Australia to the XIXth International Congress of Comparative Law.” (2014).

[2] Bentley, Karen, and Adam Denley. “Isolated nucleic acids are patentable-what does the Myriad decision in Australia mean for patent applicants?.”Australasian Biotechnology 23.3 (2013): 53.

[3] Boyle, Liam. “An Australian August Corpus: Why There is Only One Common Law in Australia.” Bond Law Review 27.1 (2016): 3.

[4] Chen, Vivien, Ian Ramsay, and Michelle Anne Welsh. “Corporate Law Reform in Australia: An Analysis of the Influence of Ownership Structures and Corporate Failure.” Australian Business Law Review 44.1 (2016): 18-34.

[5] Crockett, Michael, and Muhammad Jahangir Ali. “Auditor independence and accounting conservatism: Evidence from Australia following the corporate law economic reform program.” International Journal of Accounting & Information Management 23.1 (2015): 80-104.

[6] Evans, Alan W. “2014 Board strategy workshop.” Governance Directions66.8 (2014): 464.

[7] Floyd, Louise, and Michael Evan Gold. “Jimmy Hoffa: Alive, Well and Living in Australia? The Kennedy Legacy and Australian Labor Law Reform.” The International Lawyer 49.1 (2015): 21.

[8] Hiller, Janine S. “The benefit corporation and corporate social responsibility.”Journal of Business Ethics 118.2 (2013): 287-301.

[9] Johnstone, Richard. “Work health and safety and the criminal law in Australia.” Policy and Practice in Health and Safety 11.2 (2013): 25-44.

[10] Kirby, Michael. “Unmet needs for legal services in Australia: Ten commandments for Australian Law Schools.” Law in Context 34.1 (2016): 115.

[11] Lynch, Amanda H., et al. “The role of the Yorta Yorta people in clarifying the common interest in sustainable management of the Murray–Darling Basin, Australia.” Policy Sciences 46.2 (2013): 109-123.

[12] Meek, Paul, and Des Butler. “Now we can ‘see the forest and the trees, too’, but there are risks: camera trapping and privacy law in Australia.” Camera Trapping: Wildlife Management and Research (2014): 331.

[13] Willmott, Lindy, et al. “(Failed) voluntary euthanasia law reform in Australia: Two decades of trends, models and politics.” University of New South Wales Law Journal, The 39.1 (2016): 1.

[14] Sheehy, Benedict. “Defining CSR: Problems and solutions.” Journal of Business Ethics 131.3 (2015): 625-648.

[15] Turton, David J. “Unconventional gas in Australia: towards a legal geography.” Geographical Research 53.1 (2015): 53-67.

[16] Walker, Gordon, et al. “Commercial Applications of Company Law in New Zealand.” COMMERCIAL APPLICATIONS OF COMPANY LAW IN NEW ZEALAND, CCH New Zealand, Auckland, (2012).