Company Four Step Essay

2543 WordsMay 16, 201511 Pages
Question One. STEP 1. The specific section of law be outlined will be the implications and regulations of the setting up of a business organisation. STEP 2. When setting up a business organisation it is important to choose a proper structure, for instance using an inappropriate legal structure for the purposes and undertakings of an organisation can engender legal obstacles while performing its undertakings. Also, shifting structure is expensive and lingering for an organisation. Three types of business structure which are partnership, trust and company can be set up when more than one person is involved erasing the possibility of being a sole trader. Partnership is a business organisation established by individuals as a group with a profit making vision where the liability of each partner is unlimited. Whereas, setting up a trust is the commitment on an individual to become the lawful proprietor of a designated belongings which will have to take care of those belongings which will benefit a different individual. The third type of organisation will be company, which are divided into two types. Public and proprietary companies will be also divided into various forms of companies. A company is created by registration under corporations act S119. The company will possess the following legal characteristics as being a separate legal entity, having the legal capacity of an individual and its members will have limited liability. In contrast, partnership and trust whose members have unlimited liability hence any unpaid creditors will have to be settled from the members personal assets. In the case of (Salomon v Salomon (1897) AC 22 cited in Pearce 2014) where the owner turned his personal trade into a corporation limited by share. The company issued share and debentures to Mr Salmon but shortly the company went bankrupt leaving many creditors unpaid. The

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