BAA215 Business and Corporate Law Assignment Sample
Here’s the best sample of BAA215 Business and Corporate Law Assignment, written by the expert.
Case Study- Karacal Kitchens
Question 1
What type of company structure would you suggest is the most appropriate and why?
In concern to the case study of Karacal Kitchens, it is identified that Adrian, Barbara, Karl, and Kara wish to incorporate a company. They are starting the business by issuing 150 shares of $2000 each that shows the owners have limited liability. However, it can be said that Adrian, Barbara, Karl, and Kara should follow Limited Liability Corporation (LLC) as its business structure. It is because an LLC is a business structure that provides the benefits of corporations and sole proprietorships to the owners (Resor, 2012). In addition, it will remove some of the disadvantages that are faced by the owners in Partnership and Corporations. At the same time, it is also seen that the owners in LLC are also considered as members of the business that operates and makes the decision for the business.
In the LLC, there can be several members but a managing member should always be in this business structure, which has charge of daily operations in the business organization. Moreover, an LLC company structure is also beneficial to share many qualities like S-Corp and C-Corp during enjoying high flexibility with the requirement of very low paperwork. It is suggested to Adrian and Barbara that Limited Liability Corporation (LLC) is the most appropriate company structure because they are new in the business and they have lack of knowledge about the business operation (Schwarcz, 2014). Kara and Karl have good experience to operate the business. As per the name of LLC business structure, it can be said that the members have limited liabilities for the debts and obligations. It is one of the important advantages of LLC that if the business gets sued than the personal assets of the owners are not affected after a limited liability such as bank accounts, real estate, etc. In this, the owners can only lose the money that was put by them into the business.
On the other hand, tax is another benefit of LLC for the owner where the income from the business is counted as personal income. Therefore, the owner is not liable to pay certain federal taxes that increase the overall cost of the business (Goodgame, 2012). Similarly, it is identified that there are several issues related to legal structure in other company structures that are not available in LLC so that an LLC can have 1 to 100 members a number of owners. There is no need to have an equal amount of money invested by owners in LLC because the members create an operating agreement for different percentages of profits and losses during the formation of the company. There is high flexibility related to the management of the company where the company needs not to have annual meetings, strict book requirements, the board of directors, etc (Welch et al., 2013). However, it is suggested to Adrian and Barbara that LLC is the most appropriate corporate structure for their business or partnership with Karl and Kara.
Question 2
Does the Corporations Act 2001 (Cth) mandate that companies need to have regular meetings? Barbara works as a geologist and spends at least three months of the year out of the country. How can she participate in meetings during her time overseas?
As per the Corporations Act 2001 (Cth), it is mandated for a company to have regular meetings both meetings of directors and meeting of members. It is identified that the traditional general meetings must have a physical gathering to successfully achieve the meeting goals. It is seen that sometimes the meetings do not have a physical gathering that can impact on the decisions. It is because there is a need of more than 75% votes to make a big decision in the organization. The directors can also attend the meetings with the use of technology if they are not able to physically present. It is mandatory to have a smaller number of attendees in the meeting otherwise the decision can be taken effectively. In addition, the smaller number of attendees in the meeting is also practical issues for the court because it can be legal question according to company constitutes when the directors make a decision with a smaller number of attendees in a meeting.
In case of Barbara, it is identified that she spends at least three months of the year out of the country and she can face issue to regularly attend the meeting due to their work as a geologist. Barbara can participate in meetings during her time overseas by using the technology. As per the Company Law Review Act 1998 (Cth) in Australia, it is introduced amendments where a directors’ meeting may be held by the use of any technology that is consented by all the directors. In this concern, virtual shareholder meetings can be held by the directors to increase the number of attendees in the meeting. The directors can show their attendance with virtual and video confessing meetings to make an effective decision for the solution of the issue. For example- in the case of Guinness plc v Saunders, it is identified that a director has all information about the payment issue (case issue) due to use of technology for holding a meeting and the appeal of the director was not accepted.
On the other hand, it is also seen that the meetings of directors by telephone were also validly accepted in case of the absence of any authority or in statute rules or in own of board rules, for example, Freedom Oil Co v Illinois Pollution Control Board. In this case, it is identified that Honour was also considered that there will not be a different result when a conference telephone was used for making a decision. However, it can be said that Barbara can use other technical equipment to attend the meetings or participate in meetings when she is out of the country and the necessary decisions will not be pending.
Question 3
What are the basic duties of directors and are they different for directors that work within the business and those that are not directly ‘hands on’ within the business?
According to Corporate Law 2001, a director is a person who is appointed at the director’s position or alternate director’s position after accepting the appointment. There are different kinds of directors in a company such as managing directors, de facto directors, chair directors, executive or non-executive directors, alternate directors, nominee directors, and shadow directors (Tricker and Tricker, 2015).
The basic duties of directors are to make a decision related to organizational development and management. In concern to this, the directors have an obligation of obedience regarding constitution and decisions related to the company’s laws that were taken under the constitution. It takes a decision under rules of law permitting. It also has duties to take decisions reared to loyalty towards the company, good faith and promote the organization’s success. In addition, the director’s duty is to take provide benefit to other members and take decision-related judgments (Stout and Blair, 2017). They are also responsible to disclose the transactions involving interest conflict. However, it can be said that the certain basic duties of directors should be:
(a) Duty of care and diligence- In this, the directors has duties to care and diligence other stakeholders and make decisions for their development.
(b) Exercise of powers in good faith- The directors should discharge of duties regarding the best interest of company or success of the organization. In this, the directors should properly use their position in good faith and provide information to enhance the knowledge of organizational people and provide the advantage of this information to others.
(c) Duty to have regard to the interest of the employees- In this basic duty, the director should work for the development and interest of the employees. The decisions taken by employees should be in favor of employees as well as other stakeholders (Marshall and Ramsay, 2012).
There are some directors of the companies who are not directly ‘hands on’ within the business. They have fewer duties then the directors who work within the business because the directors within the business need to make decision-related to the daily management and operation whereas the other directors do not have this duty. They have duties to attend the meetings of shareholders and rights of voting (Tricker and Tricker, 2015). The daily operation and management decisions are not taken by the non-working directors in the business because they have a lake of knowledge about daily business operation.
References
Resor, F.R., 2012. Benefit corporation legislation. Wyo. L. Rev., 12, p.91.
Schwarcz, S.L., 2014. The governance structure of shadow banking: rethinking assumptions about limited liability. Notre Dame L. Rev., 90, p.1.
Goodgame, J., 2012. New Developments in Master Limited Partnership Governance. Bus. Law., 68, p.81.
Welch, E.P., Saunders, R.S. and Voss, J.C., 2013. Folk on the Delaware General Corporation Law. Wolters Kluwer Law & Business.
Liu, H., Vimont, U., Wand, M., Cani, M.P., Hahmann, S., Rohmer, D. and Mitra, N.J., 2015, May. Replaceable substructures for efficient part‐based modeling. In Computer Graphics Forum (Vol. 34, No. 2, pp. 503-513).
Nehme, M., 2013. Indigenous corporate governance in Australia and beyond. David Frenkel, Economy and Commercial Law–Selected, (2013), pp.93-109.
Anderson, H.L., Welsh, M.A., Ramsay, I. and Gahan, P.G., 2012. Shareholder and Creditor Protection in Australia-A Leximetric Analysis. Company and Securities Law Journal, 30(6), pp.366-390.
Macdonald, R.D. and Ramsay, I., 2016. The Australian Sports Commission’s Governance Reform in Sport Discussion Paper and Voting Rules in Corporate Constitutions. Company and Securities Law Journal, 34(5), pp.387-402.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices. Oxford University Press, USA.
Marshall, S. and Ramsay, I., 2012. Stakeholders and directors’ duties: Law, theory and evidence. UNSWLJ, 35, p.291.
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