Business Forms in Australia



1.0 Introduction1

2.0 Background2

3.0 Sole Proprietorship3

3.1 Advantage of Sole Proprietorship3

3.2 Disadvantage of Sole Proprietorship4

4.0 Partnership5

4.1 General Partnership6

4.2 Limited partnership6

4.3 Partnership at will7

5.0 Company Limited by Shares7

5.1 Membership in the Company9

5.2 Find the Share Capital10

6.0 Analysis of Issue: Issue of Shares10

6.1 Role of Shareholders and Directors11

6.2 Issues about Participation13

6.3 Numbers of Shares to Issue13

6.4 How to Issue Shares14

7.0 Conclusion14

References................................................................................................................................17

Table of Cases

Australian EGG Corporation Limited (AECL)

Thirty Car Rental Alice Springs

Aboriginal Enterprise

Sutherland v Gustar

Sheppard & Cooper Ltd v TSB Bank plc

United Tankers Pty Ltd v Moray Pre-Cast Pty Ltd

Edmunds v Brown and Tillard

Case of the City of London and Salmon v Hamborough Co. are the authority

Salomon v Salomon & Co. Ltd. 1897

New South Wales v Commonwealth 1990

Trevor v Whitworth and Ooregum Gold Mining Co. v Roper

Spreag v Paeson Pty Ltd 1990

Adams v Cape Ind PLC 1990

Briggs v James Hardie & Co. Ltd 1989

Business Forms in Australia

1.0 Introduction

There are various types of organizational forms through which the business can be started in Australia. The three organizational forms are (i) Company Limited by Shares, (ii) Sole trading Enterprise and (iii) Partnership. All three types of business forms have their own advantages and disadvantages. However, it is important for an entrepreneur to select one of the organizational forms in order to start the business activity. In the first case that is Company Limited by Shares, is established when there is a need to expand the business and high amount of financing is needed in this regard. The two types of Limited Companies are Private Limited Company and Public Limited Company. The company needs to sell the shares to the investors but in Public Limited Company; the finance is raised by selling stock to the Stock Exchange. There is limited liability and all the shareholders of the company are only liable for their own investment. This decreases the risk of the investor losing a lot of money during the financial crisis (Lim & Dallimore, 2002).

The Sole Trading Enterprise simply refers to the business activity performed by one individual. In this form of business, only one person is responsible for the business operations by hiring a certain level of staff. The sole proprietor needs to arrange the finance for the business activities and also needs to take important steps in running the business activities. However, the sole proprietor faces the problem of essential advice in the management of the business activities. Secondly, the risk of losing the entire finance is also quite high. The loss can be devastating for the sole proprietor. The opportunity to earn high level of profit is also that much because of the less scope for large investment. Therefore, these issues are certainly a major challenge for the sole proprietor.

The partnership is also a vital option for starting a business. It is usually studied in various Business Management topics, that the partnership is the second option for the investor after starting the business activities on sole proprietorship. The basic form of partnership starts with the combination of two people (Wood, ...