4 ASSIGNMENTS

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BLOCK 1 TRIMESTER 1 2019: TLAW 202 – CORPORATIONS LAW – TERM ASSIGNMENT QUESTIONS

Assessment Details

Due date: Friday, 29 March 2019 Weighting: 40% Length: 2000 words (+/- 10%), correctly referenced Through Moodle

Objectives

Answer the following questions with reference to the relevant statute law and general common law principles operating in Australia concerning the consequences of the company being a separate legal entity and the application of the internal rules of a company. Do not consider the effects of legislation potentially applicable other than that specifically identified. Students may make whatever additional factual and/or legal assumptions are necessary or convenient. As a guide, students should write about 2000 (+/- 10%) words, or about 500 (+/- 10%) words per 10 mark allocation.

Assessment Task

Question 1 10 Marks

Melissa is running a busy clothing shop business in the form of a sole trader. She decides to incorporate her business. She wants to become an employee of the business so that he can be covered by workers’ compensation and superannuation. She also wishes to stay in control of the management of the company.

a. What type of business organization should Melissa choose? Explain why. b. What are the formalities that Melissa needs to complete to be able to create a

company? c. Assuming Melissa decided to incorporate a proprietary company, how many directors

does the company need to have? Does the company require a company secretary? d. Will Melissa be able to register the company with the name ‘Zeus Pty Ltd’? Search the

National Name Index on ASIC website and determine if it is possible to register a company under the proposed name. If such a company already exists find out as much information as you can about it from the site.

e. Melissa decides to register the company under the following name: ‘Melissa’s Chic Pty Ltd’. Is the name available? If so, how can she ensure that no one else uses it before her company is registered?

f. Is Melissa required to have a registered office? And if so does it need to be open to the public?

Question 2 15 Marks

Shark Ltd was running a financial business that involved two departments: one department insured risky loans, while the other department lent money. In September 2002, Shark Ltd received a report from its financial adviser that noted that its insurance departments may suffer a huge loss due to rising claims. The report was correct and Shark Ltd ended up paying a number of claims worth $10 million. In February 2003, Shark Ltd registered Safe Pty Ltd. The new company was a wholly owned subsidiary of Shark Ltd. (see Corporations Act for

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definition). Shark transferred its insurance department to the new company. The new company was running its business from premises leased from Shark Ltd. Often, the board of directors of Shark Ltd were heard bragging that now they could access all the funds and profits of the new company, Safe Pty Ltd., without being responsible for any of its liabilities. Safe Pty Ltd had a policy to pay monthly dividends to Shark Ltd. Shark Ltd also appointed all the directors of Safe Pty Ltd. In fact, two of the directors of Shark Ltd (Sam and Jack) were appointed as the only directors of Safe Pty Ltd. Shark Ltd usually devised the policies of Safe Pty Ltd and Sam and Jack implemented these policies. Shark Ltd also provided the initial capital needed for the business run by Safe Pty Ltd. to proceed. The employees in Safe Pty Ltd were allowed to use some of the financial records held by Shark Ltd to assess whether or not they should accept or deny an insurance application. In 2009, the market suffered huge losses and as a result of this downturn a number of insurance claims were made. However, Safe Pty Ltd had insufficient money to cover all these claims and consequently, the company went under liquidation. The policy holders would like to know if they can take action against Shark Ltd. Advise the policy holders. Question 3 15 Marks

Architect Pty Ltd was registered in 2005. Mario, Lucas and Samantha are its only shareholders. Mario is the company’s director. Lucas is the company secretary. Samantha was married to Mario, and when the company was created the three shareholders included the following clause in the company’s constitution: “Samantha was to remain as Architect Pty Ltd’s accountant and cannot be removed from this position without proven misconduct.” In 2007, after marriage difficulties, Mario and Samantha got divorced. Samantha has just received a letter from Architect Pt Ltd stating that her services were no longer required. ADVISE Samantha on whether she can prevent the company from terminating her services as an accountant in this way. She especially wants to know if the company’s constitution would protect her. Answer this question by referring to Corporations Act 2001 and decided cases.

Assessment Criteria

Fail

You will have shown evidence of the following:

• the written expression is poor and difficult to understand • the answer is poorly organised • referencing is generally inadequate • lack of familiarity with the legislation and its application • failure to identify and address the issues in the question • reasoning and application demonstrated is poor.

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Pass

You will have:

• made a conscientious attempt to address the topic and/or answer the question • shown evidence of having done the required reading and of having understood the

reading • presented a reasonable argument to back up your conclusions • demonstrated a reasonable level of spelling and grammatical usage • used referencing but this may need improvement

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• issues that may need to be identified and addressed in more depth.

Credit

You will have:

• addressed the topic and/or answered the question directly • presented soundly based arguments and backed these up with reasons • gone beyond description to analysis of key issues • used the English language well • shown evidence of reading widely • demonstrated understanding of the reading • used referencing that is satisfactory.

Distinction

You will have:

• met the above criteria for a credit • demonstrated the attainment of a high degree of understanding of the concepts of

the course • demonstrated deep insight into the application of knowledge and skills acquired to

complex theoretical and practical situations • used referencing correctly • made reference to all appropriate legislation.

High Distinction

You will have:

• met the above criteria for a distinction • demonstrated the attainment of an outstanding level of achievement regarding the

objectives of this course • demonstrated an interesting and/ or original approach/ idea/ argument • demonstrated mastery of the relevant referencing system • ensured conclusions are backed by well-reasoned arguments demonstrating a

detailed insight and analysis of issues • ensured references are made to the appropriate legislation for particular issues.

END OF QUESTIONS