CORPORATION LAW

Corporation Law

Name of the Writer

Name of the Institution

Corporation Law

Question 1

The Corporations Act 2001 also known as the Corps Act or Corporations Act. It is a Commonwealth of Australia act, which establishes the laws concerned with business in Australia at level of interstate and federal. It emphasizes mainly on companies, even though it also includes some regulations and laws involving other entities, such as partnership or corporation and managed schemes of investment (Jones & Moens, 2009).

As Nicola and May keen to expand their business and to fulfil their need of additional capital; they are thinking about incorporation. However, before going for incorporation they must consider the advantage and disadvantage of incorporation, as well as must decide which form of incorporation is appropriate for their business.

There are several advantages and disadvantages of incorporation which are as follows:

Incorporation provides a clause of limited liability and provides protection to business owners. Corporation limits the Shareholders' liability on their personal assets because corporation is an independent entity. The transfer of ownership is easy in a corporation. As an independent entity, ownership can be transfer without affecting the business. In case, current shareholder decided to sell his shares, it will not affect the business operations and corporation continue with new owners. It is easier to raise large amount of capital for business, as incorporation facilitates raising capital investment by issuing shares. The stock corporation structure attracts investors to invest. In a corporation, the structure of management is centralized, where board of directors are elected by shareholders and the elected member is responsible to run the business. Incorporation also provides clear rationale for business existence and sets out rules regarding how the corporation shall operate.

Incorporation also has some disadvantage, such as there are several expenses associated with incorporation like incorporation fees and cost of taxation. The corporation and shareholders both have to pay taxes separately. Incorporation necessitates book keeping and maintenance of records. Tax returns and other reports required to be filled on regular basis. Business bank records and accounts should be kept and maintained in isolation from personal assets and accounts, and documentations must be kept of corporation happenings.

Nicola is recommended to transform business to incorporation and based on business circumstances Limited Liability Company (LLC) form of incorporation is suggested because profit and loss is allocated differently than interest of ownership as well as attracts small businesses is the limit they gibe on the personal liability of owners. Nicola can set up a corporation that let him enjoy favorable rates of taxes and provide a fringe range benefits to owners and employees and subtract the cost as a business.

Question 2

A)

Under Corporation Act 2001, if the Marcia set out a corporation before the age of 18, she is liable to under the clause of personal dishonesty as no minor can be a director of a company. Moreover, ASIC can impose heavy fines, prison the company officer, or award damages for the dishonesty and recklessness of Marcia.

B)

Yes, Marcia can register the company name within ...