HA3021 – COMPANY LAW
Total Length 1800 – 2000 words
Assessment Marks available – 20 marks
Due Date – Week 10 QUESTION 1 (4 Marks)
Nicola and May are partners in a business which operates a second-hand book
shop. They have two employees working for the business. The shop is located in
leased premises. The business is doing well and has been profitable for them.
An opportunity has arisen to purchase two second-hand book shops in nearby
suburbs. Nicola and May are keen to expand their business. They will need a
large injection of funds to purchase the additional businesses. They will need to
appoint a manager to at least one of the shops, as they will be fully occupied by
the other two.
Nicola is concerned about her potential liability for the debts and liabilities of the
partnership. Also, she is concerned about the future of the business if one of
them should decide to leave, as the lease is in both of their names.
Advise Nicola on the advantages and disadvantages of incorporating. If you
recommend incorporation, what form of incorporation would be the most
QUESTION 2 (8 Marks)
Marcia is an entrepreneurial 17-year old with a busy window cleaning business.
She is studying for a commerce degree. She wants to incorporate her business.
She wants to become an employee of the business so that she can be covered
by workers’ compensation and superannuation. She completes the registration
documents for a proprietary company. She uses her own name as the sole
director/shareholder but falsifies her date of birth (showing she is 19 years old).
ASIC subsequently registers the company having no knowledge of the fraud.
A) If the fraud were discovered what could ASIC do about the company?
Now assume a slightly different scenario. Marcia does not register her company
until she is over 18. She wants to call the company “Marcia’s Guaranteed Sparkle
B) Will Marcia be able to register the company with this name? If so, how can she
ensure that no one else uses it before her company is registered?
C) Is Marcia required to have a registered office? If so, can she use her parents’
home address and, does the office have to be open to the public?
D) Does she have to display the company name and/or ACN/ABN
– on her accounts?
– outside her parents’ house? QUESTION 3 (8 Marks)
Mr. Shifty, Ms Avoider and Mr. Marginal call to make an appointment with your
firm, Fees Ruthless, solicitors. You have been asked to establish their new
company (No-Tax Agents Pty Ltd). You advise them not to bother with their own
constitution, but instead to rely on the replaceable rules in the Corporations Act.
Advise who should be appointed as directors of their company in view of the
A) Mr. Shifty states that he does not want to be appointed a director or secretary.
He suggests instead that:
• his family company be appointed as a director; and
• the company not have a company secretary;
B) Ms Avoider is currently unavailable for meetings as she has five months still to
serve for her last conviction for falsifying company accounts;
C) Mr. Marginal is 72 years old and has Alzheimer’s disease. A trustee has been
appointed to administer his estate.
Assume that Mr. Shifty’s family company subsequently goes into liquidation. In her
report to AS1C, the liquidator states that the secured creditors have been repaid
in full, but the unsecured creditors will not receive more than 20 cents in the
dollar. The liquidator does not find any evidence of wrongdoing on the part of Mr.
Shifty or any of his fellow directors.
D) What (if any) ramifications does this have for Mr. Shifty, assuming that ASIC’s
records show that Mr. Shifty has, over the last nine months, had a similar track
record with two other small, proprietary companies?