Comparison of Mariyah and Kenjis Current Business Structure - Math Problem Example

Name: Instructor: Course: Date: Corporation Law Question 1: analysis and comparison of Mariyah and Kenji’s current business structure and the suggested structure. Anyone can set up a business any day. It is universally accepted that whatever is needed is a product that can meet the demand and the needs of the customers at a profit that will ensure business continuity. Additionally, as much as registering the business with the local government or the state is not needed necessarily to make profits, most business experts believe that it is a very smart step for some reasons (Chen, Maria and Sue 218). The current structure of Mariyah and Kenji’s business can be said to be a business activity for profit, but it is not recognized by the law. In this case, one of the major factors that make this business not to be acknowledged as a business in Law is the fact that their business is not registered anywhere although it has a name. According to the Australian Corporations Act 2001 (cth) section 168, a business needs to be registered with the local government or the state for it to be acknowledged as a legal business. All that is required to register a business is a memorandum of association and a business name. Since their pop-up shop is currently doing business using the name Glutz, it would have been better if this name was registered so as the running of the business is smooth (Kinley and Rachel 450). A registered business name is essential in ensuring the running of the business accounts since a name is required in opening bank accounts for the business. In other words, proof is needed to show that the business is properly registered with the local government so as to be assigned a business account. However, in IMF (Australia) Ltd v Sons Of Gwalia Ltd, the judgement argued that registration of a business name only serves to protect the rights and information about shareholders. Furthermore, this was also backed by Corporations Act 2001 (cth) section 177which limits the type and the level of information obtained in the company register about shareholders. Nevertheless, a business bank account is necessary because it can ensure that individuals can separate their personal financial activities from the business activities. In simple terms by having a business bank account, it will help in separating the business activities from personal issues and in the process, your clients will be able to have an official and professional business account instead of giving them your personal account with your family name (Kinley and Rachel 450). The best structure of the business that Mariyah and Kenji could adapt for their Pop-Up food business is a limited proprietary form of business (Chen, Maria and Sue 220). A proprietary business does not necessarily need more than 50 to start. All that is required is a registered business name and a memorandum of association between its members as in this case, their names, the names of their three children (Flame, Cinder Ash) and the name of their employees (Elke).In so doing, a memorandum of association will serve to show that all the members that exist in the business agreed to participate in moving the business forward. In a proprietary form of business, a business name and registered trademarks are also important is ensuring that whenever Glutz would like to apply for a business name they will do so with much ease since investors and lenders would always like to get to know the business registration details along with other business applications before the loan approval is cleared. Moreover, a registered business trade mark and the name can enable Glutz as a business to receive some few discounts from suppliers that may not normally be received if the business has no registered name. Customers and clients especially those that have never been involved with the business before may require some assurance that the firm is legitimate.in such incidences, a registered company name makes the customers be at ease whenever they are making a purchasing decision in Mariyah and Kenji’s pop-up food stall caravan. It is, therefore, important for Mariyah and Kenji to register Glutz as their business name most especially when they have established a significant reputation within their proximity and have hopes of expanding shortly. One of the requirements of the limited proprietary business is the fact that, a list of all the employees working for the company are required to be registered based on the Corporations Act 2001. This rule binds the workers to the company since it shoes that the company workers have vowed to work and be bound by the rules of the business. In this case, through restructuring the business into a limited proprietary business, Elke will have an obligation to serve and protect the reputation and image of Glutz at all costs. Another possible potential way for Mariyah and Kanji to restructure their business under the Corporations Act 2001 is registering as a limited company. This will ensure that the business operations (McCorquodale and Penelope 499). In so doing, the business will operate as a legal entity that is guided by the rules and regulations stipulated under the Corporations Act. In so doing, Elke will be bound by the Corporations Act governing the business and their obligations hence he will not feel sidelined in the process of changing the ownership of the business since his responsibility will be Glutz as a business. The business cannot be acknowledged as a legally separate entity unless registered under the Corporations Act. In this Act, the business is required to submit some documents such as the annual company returns and annual accounts. In this case, the Elke as Glutz accountant will not be sidelined if the company is registered as a limited company since he will still be required to do the company audits and accounts (McCorquodale and Penelope 499). All that they are required to do is signing their official names on the memorandum of understanding and association in which they will be confirming to the law that they are in agreement to establish the company. If they chose to establish their company based on shares, then the memorandum of association will also be able to identify clearly how the shares were agreed to be divided or rather shared. According to the Corporations Act 2001, it is accepted that the memorandum of Association is believed to be a very short document since all the rules of the company constitution are located in the articles of association (Chen, Maria, and Wright 220). Therefore, in this Act, the memorandum does not have a major purpose since the business is registered, it cannot be amended. Question 2: Analysis of the information provided by Mariyah and Kenji and suggestions of legal websites to help them further on their issue. It is important for the business to conduct their search very well so that they may ensure that their business company name and associated trademarks are not similar to another business at all costs. In other words, it is important to ensure that the business does not share the same name, same philosophy and provide the same type of products even if the way the services and the products are described using different names. In general, any business that has registered or incorporated its business dealings under the Corporations Act is bound by the rules and regulations stipulated under it. In other words, the corporations Act 2001 protects the business dealings against any legal sanctions and cases such as imitation, illegal use of the company’s trade mark (McCorquodale and Penelope 498). The company’s trade mark or reputation is characterized by so many things which include its customers and workers. Registering the business as a proprietary would give Glutz an upper hand since under the law, Elke is supposed to be obedient and protect the image and reputation of Glutz and its dealings. Being an accountant in Glutz business, it means that under the law, he is bound by ethics provided by Glutz. Besides, according to Corporate Acts 2001 (cth) section 124, a business possess a legal capacity and authority of an individual both outside and inside the jurisdiction. In this case, Glutz Company has the power of confronting Bucks and Dawgs Company over the association with their accountant. In simple terms, this section can the company has the power to cancel and issue shares within the company. In other words, Glutz can chose to relieve Elke off his job obligations owing to the fact that he has engaged in an employment malpractice. According to the context of ASIC V Adler, Elker as an accountant has an obligation of acting responsibly and honest in all issues that pertain the company. In other words, the judgement in this case argued that any employer possess the equitable principles of reducing the level of conflicts of interest and in the process, they should not take advantage of any information that is deemed confidential as postulated in Corporations Act 2001 section 182 and 183. It is an offence for any person to use their insight knowledge of a company for their benefit or to do harm to the business they are working for based on the Corporations Act 2001 section 127.In this case, Elke used his insight knowledge to start a business with Buck without Mariyah and Kenji’s knowledge. In other words, this is an offence under the law which is punishable. Furthermore, it is very challenging for any business to claim ownership or prior employment of a particular name unless the business has established a very strong brand image and reputation before any other individual claims or opposes the business trademark or name. Since Glutz is registered as a limited proprietary business, it can sue the actions of Elke in its name without necessarily including the names of Mariyah, Kenji, and their three daughters. In this case, the business will be a legal entity that is operating with a very different and separate identity from the business persons running it. More information about the elements revolving around this issue can be obtained from ASCI websites. Another important website that can be helpful to Mariyah and Kenji, in this case, is HABC (Hellenic-Australian Business Council website legal disclaimer official website).In this website, it is argued that one of the factors that the business should consider is legal obligations that are stipulated by Australian Securities and Investment Commission (ASIC) (Kinley and Rachel 450). In this case, it is believed that there are strict guidelines and standards that are postulated under the Corporations Act 2001 which revolves around ensuring that the company reports to members and the ASIC (McCorquodale and Penelope 499).In this case, the issue of transparency and change of the organization leadership is also incorporated in the company report. By registering the business as a limited business, it means that it has legal limited liability. In other words, through the registration of Glutz, Elke had a legal obligation to Glutz, which makes him liable or responsible for his actions against Glutz. Besides, the Corporations Act 2001 argues that a worker of a particular business company may be taken liable or responsible if they are discovered to be negligent, reckless or fraudulent (Kinley and Rachel 449). Because of the issue of limited liability, the business may be categorized as a high-risk business which in the end makes creditors want personally the company owners to be the guarantors of the business liabilities. Personal liability of the business directors can also be considered if the directors commit an offence that is forbidden according to the Corporations Act 2001 or is discovered to have performed their obligations in a negligible manner hence a company can be litigated and litigate in its right. Based on the judgement of James Hardie Industries NV v ASIC, Elke performed his obligations in a negligible manner by deciding to start Bucks and Dawgs business (Kinley and Rachel 449). In this case, the CEO of the company was found guilty for failing to perform his obligation as required and for providing misleading information. Elke was hiding what was deemed as a malpractice behaviour which can otherwise be classified as a misleading information to the company. To obtain more information about the roles of the business accountant and the accounts, more information can be obtained Australian Defamation laws and the Internet website most especially about the responsibilities of the company director and keeping of company record (Chen, Maria and Sue 221). If a particular business employs an individual, they must be able to follow the regulations and requirement of the Corporations Act 2001.Since Elke was working as an accountant in Glutz; then he has the responsibility to act based on the rules and regulations stipulated under the Corporations Act 2001 Question 3: Advising Bucks and Dawgs According to the Corporations Act 2001, a director of a proprietary company is at all times expected, to exercise integrity in all their business dealings (Kinley and Rachel 450). In this case, before deciding on setting up the business, Bucks and Elke could have assessed the risk of the business first before engaging in any business activities so that they may comprehend and ensure that the company can be able to pay their creditors on time. Additionally, as the company directors, they must be able to ensure that they use any available information they access through their position and to apply it to the best interest of the company (McCorquodale and Penelope 503). In other words, employing the company information for personal gain or to inflict harm on other individuals or to the business as well may have exposed Elke to crime claims under Corporations Act 2001.Besides, the company information, should not be held in a more confidential manner, but it should rather be shared for the benefit of the company and any other associated persons. In this case, Elke could have let Mariyah and Kenji know that they are starting a company with Bucks According to Salomon v Salomon, a company is acknowledged as a juristic individual because it exists in the contemplation of the law. Therefore, it has to depend on the skills and the capability of the company director for it to operate successfully. However, based on this case law, this individuals represent the company in respect to what they do within the company scope and the authority that is accorded to them within the company name. Bucks and Elke as directors must have assessed and established how any proposed company action will impact the performance of the business before going ahead with the proposal plan. A director must also be in a positon to try and obtain information from outside source and advice whenever more details and data is needed to enable the company to make an informed decision. In other words, Elke as a director should be in a position to question their staff and managers to see the direction the business is progressing (McCorquodale and Penelope 499). In so doing, the problem that was caused by Bucks could have been solved earlier. Moreover, Elke should not sideline himself in the issues pertaining the company but they he should rather actively participate in the meetings of the company. In so doing, the will be able to identify potential challenges and formulate ways of improving on them. In simple terms, a director should only take up this position if they have the capability and time to dedicate the effort required to run the company. Since Back Dawgs is a proprietary company, they should try as much as possible to avoid engaging in selling shares to the public and move away from any issues that revolve around illegal fundraising. According to the Corporations Act, if an individual who is currently holding the position of a director becomes bankrupt, convicted for fraud-related offence, or engage into a personal insolvency agreement then the person will automatically lose their position (Kinley and Rachel Chambers 449). Since Bucks was convicted because of the offence of not repaying the debt owed by the company, then Elke as the director must let the Australian Securities and Investment Commission know about the company’s current situation. Besides, based on the opinions and the judgement postulated in Salomon v Salomon case, the principle of the director has an obligation to the company but this does not necessarily mean that they are the company and the company is them, but rather it means that the director represents what the company does but cannot be sued in the company name. Buck and Dawgs being a small proprietary business, it does not necessarily need to update and submit their records to ASCI annually, but they must ensure that they keep their financial records up to date. In so doing the financial position of the company is monitored and managed for raising finances or for tax purposes (Chen, Maria and Sue 220) Buck and Elke must also ensure that Bucks and Dawgs can repay its debts whenever they become due so that their company may not be classified as an insolvent business insolvent. According to the law, a director must be able to prevent the business from such incidences in the sense that, they must consider whether they have reasonable grounds to pay existing debts and any other new debts whenever they become due (Kinley and Rachel 450). In other words, based on the judgement of ASIC v Fortescue Metal Group which stated that any officer found to disobey their obligations based on the Corporations Act 2001 (cth) should be held responsible for their actions as individuals, Bucks failed in this regard and exposed himself to legal sanctions and prosecutions by the business liquidators or creditors to recover amounts that were lost by creditors on the eve of his actions. In such circumstances, it is not just the company that might be at risk, the director’s personal property as well may be liquidated. The corporations 2001 Act (cth) section 173 and 174, as Bucks and Dawgs business directors, Bucks and Elke must be able to keep proper business records according to the law. In other words, Bucks and Elke must ensure that the company can keep proper accounts records that explain and record the transactions of the business and in the process be able to explain the performance and position of the company. Besides , Corporations Act 2001 (cth) section 174 goes ahead to postulate that they must allow other members to inspect this records for clarifications Before commencing the business, Buck and Elke could have performed a background check on each other to ascertain if they are able legally to perform their obligations (Chen, Maria and Sue 221). Additionally, they must ensure that each and every individuals on board comprehend their roles, legal obligations and responsibilities based on the Corporations Act 2001 and ASCI. Works Cited Chen, Rongrong, Maria Cadiz Dyball, and Sue Wright. "The link between board composition and corporate diversification in Australian corporations. “Corporate Governance: An International Review 17.2 (2009): 208-223. Kinley, David, and Rachel Chambers. "The UN Human Rights Norms for Corporations: The private implications of the public international law." Human Rights Law Review 6.3 (2006): 447-497. McCorquodale, Robert, and Penelope Simons. "Responsibility beyond borders: state responsibility for extraterritorial violations by corporations of international human rights law." The Modern Law Review 70.4 (2007): 598-625. Read More