Analysis of the process of registration of the company and selection of the company name by Richard, David and Liam?
In Australia, one of the techniques in which a business can be operated is a company. A company is not operated automatically but requires a proper procedure which must be followed by the intending person and which is rightly established by ASIC and under the Corporation Act 2001. Thus, it is first important to understand the basic procedure that must be followed for the registration of the company. (Nolan 1996)
Every person who wants to start a business by way of a company must be aware whether he wants to start a public company or a private company. A private companies can be of various kinds, such as, those companies which does not have limited liability is unlimited liability company; the company the liability of which is limited is a limited liability company; the company which is based on guarantee is a company limited by guarantee. Thus, it is first desirable to select the nature of the company that a person wish to form;
The next important step is the finalization of the name of the company. It is very important that the name that is selected by the company must not contain names such as Royal, incorporated bank, trust and its usage requires prior approval of the government. No name must be such which is offensive, derogatory or misleading to the public. No name must be kept which is an already existing name or similar with any other name of the company. (Seal and Penrith 2008)
It is desirable to analyze the framework in which the company is bound to perform. Whether the company is intending to run itself by its own constitution wherein the rules and responsibilities are decided by the company itself or the company may run it by the replaceable rules made Part 2B, chapter 2B.4 of the Corporation Act 2001 and if the company intends then it can run by both the constitution and the replaceable rules.
When the kind of company is decided with its name and management, then, it is necessary to decide the kind of liability under which the company wishes to run. It can be either company with limited shares or company with unlimited shares.
It is necessary that every private company in Australia must have one secretary, member and director and must be of sound mind and majority of age. It is necessary that every officer and members of the company must give their asset to abide by the company and must comply with all the obligations that are imposed upon them.
Every company must have registered place of business. If the place is the property of the company then there is no need of any approval but if the property is not of the company then it is necessary to seek the conformation of the owner.
Form 201 and fees must be deposited to ASIC. When the form is submitted then the company is registered and a certificate of incorporation is issued along with can number and Corporate key.
Every company must keep its details up to date and ACN number must be mentioned on the company documents
When all the proceedings and all the formal requirements as mentioned by the ASIC are comply with then a company is formulated. When a company is formed then there are various features that are associated with the company. In Salomon v A Salomon and Co Ltd [1897] it was held that once a company is formed then it is different from that its members and officers. The acts of the company are its own acts though the same are carried out by the officers. The officers are only the representatives who are carrying out the acts on behalf of the company only and make the company binding in regard of the same. (Gibson and Fraser 2013)
Apart from the feature of separate legal entity, there are various other features that can be associated with the company; that is, a company has liability which is limited in nature and the shareholders are not liable for all the debts of the company and are only answerable as per their shareholding; also, when a company is formed then it is an artificial legal person and never dies. The members are only the representative of the company and thus even if the members leave the company still the company keeps on operated; the company shares can be transferred easily. Further, capital can be easily raised and there are tax advantages that are associated with the company. (Gibson and Fraser 2013)
The law related to company registration and requirements of name for company is now applied.
In the Hunter valley region of NSW, Richard has an extensive olive grove with 12,000 trees and is expanding. David and Liam are the sons of Richard and had moved to Sydney to help Richard in the expansion of the business. Thus, Richard, David and Liam must follow the process that is valid down by ASIC in order to register their business in the form of a company and thus attain the various distinct features of the company such as separate legal entity, tax benefits, limited liability, perpetual succession, easy to raise capital etc.
Now, there are few name suggestions that are provided.
“Rich’s Guaranteed Olives”, is the name that is suggested by David and Liam in order to honor their father. However, the name that is suggested gives an impression that rich quality of olives are guaranteed by the company which is not true. Thus, a misconception is provided to the public which will mislead them. Thus, the name that is suggested is not a right name.
However, Ridali is the name that is suggested by Richard. Richard intends the name as the same is the combination of all of the three. Now, this name is not giving any kind of misleading information to the public and should not be identical with any other name in order to be valid.
Conclusion
Thus a company can be registered with the name Ridali by comply with the process of registration and attains the various features that of a company.
Against whom Terry can take action for his injuries, Lazarus Pty Ltd, CMS and/or CM?
In Salomon v A Salomon and Co Ltd [1897] it was held that once a company is formed then it is different from that its members and officers. The acts of the company are its own acts though the same are carried out by the officers of the company. The officers are only the representatives of the company who are carrying out the acts on behalf of the company only and make the company binding in regard of the same and the officers are not held liable for the same. (Gibson and Fraser 2013)
This distinction amid the company and its officers is one of the paramount features of a company and is considered as the veil of the company. but, the courts has found number of reasons when this veil of the company was not considered as good and the court are found willing to pierce the veil making the acts of the directors as their personal act and not the acts of the company and is held in Industrial Equity v Blackburn (1977). (Gibson and Fraser 2013)
There are situation when two companies are formulated wherein one company is considered to be the parent of another company (subsidiary company). But the formation or the relationship amid the parent and subsidiary company are found to be such that the courts have regarded to pierce the veil of the company.
There are situations when the subsidiary company’s involved in some kind of wrongful act which is legally not obligated to undertake, that is, there is tortuous action that is undertaken by the subsidiary. In such situation, if the subsidiary is not financial sound to pay the liabilities or the subsidiary is dissolved the veil that makes a distinction amid the subsidiary and the parent company must be lifted and the liabilities must be imposed upon the parent company and is held in Barrow v CSR Ltd (1988). In CSR Ltd v Wren (1997), also, loss is caused to the employees of the subsidiary commonly because of the negligent act, however, the subsidiary company is not able to pay the liability to the aggrieved, thus, court finds it appropriate to lift the veil so that the liabilities of the aggrieved can be imposed upon the holding company. (Ramsay & Noakes 2001)
There are situations, that all the activities of the subsidiary is conducted by the holding company and thus the holding company is nothing but the agent of the subsidiary and in such situation if the subsidiary company is not in the position to pay the aggrieved party then the veil can be lifted and the parent company is held liable to make good the loss of the aggrieved and is rightly held in the leading case of Stone and Knight v Birmingham Corporation (1939). (Ramsay & Noakes 2001)
When a subsidiary is nothing but an act of sham that is incurred by the holding company, in such situation, the subsidiary is disregarded and the veil is lifted and is held in James Hardie & Coy Pty Limited v Putt (1998).
Now, any aggrieved employee is on the view that the company is not taking any action for the losses that are caused to him because of the acts of the company, then, the employee has power under section 236-237 of the Corporation Act 2001 to initiate application on his own behalf provided it is in the interest of the company as a whole.
Cosmo Mining Services Pty Ltd is the subsidiary of Cosmo Mine Ltd as out of 200 shares of Cosmo Mining Services Pty Ltd, 120 shares are hold by Cosmo Mine Ltd. Terry is working with Cosmo Mining Services Pty Ltd. Now, it is recently found out that Cosmo Mining Services Pty Ltd is indulged in mining activities and which has contaminated the nearby river the water of which is used at Gunbarrel. Now because of the use of the contaminated water, many Gunbarrel employees including Terry have suffered with cancer.
It is now submitted that Cosmo Mining Services Pty Ltd in order to avoid its liability dissolved the company and formulated a new company in the name of Lazarus Pty Ltd. the main aim of forming Lazarus Pty Ltd is to avoid the liability of Cosmo Mining Services Pty Ltd. Thus, the aim is to incur fraud on the employees of Cosmo Mining Services Pty Ltd including Terry. Thus, the veil amid Cosmo Mining Services Pty Ltd and Lazarus Pty Ltd must be pierced and Cosmo Mining Services Pty Ltd cannot shed away from its liabilities.
Further, Cosmo Mine Ltd is the holding company of Cosmo Mining Services Pty Ltd. the main task of Cosmo Mine Ltd is that it leases all the mining related tools and then sub leases the same to its subsidiary Cosmo Mining Services Pty Ltd. it is submitted that all the acts of Cosmo Mining Services Pty Ltd is carried out by its holding company Cosmo Mine Ltd. There is a presence of agency amid the two and it is required that the veil amid Cosmo Mine Ltd and Cosmo Mining Services Pty Ltd must be pierced and the two companies must be treated as one. The loss that is incurred by Terry and which must be recovered from Cosmo Mining Services Pty Ltd must be imposed upon Cosmo Mine Ltd.
But, since no action is undertaken by Cosmo Mine Ltd or by Cosmo Mining Services Pty Ltd, thus, by relying upon section 236-237 of the Corporation Act 2001, Terry can take action against Cosmo Mine Ltd as the distinction amid Cosmo Mine Ltd and Cosmo Mining Services Pty Ltd is now pierced.
Conclusion
The veil amid Cosmo Mining Services Pty Ltd and Cosmo Mine Ltd are now removed and Terry by availing his rights under section 236-237 of the Corporation Act 2001 can sue Cosmo Mine Ltd.
References
Gibson and Fraser. (2013). Business Law 2014. Pearson Higher Education AU.
Nolan, J. (1996) Australia Business: The Portable Encyclopedia for Doing Business with Australia, World Trade Press.
Ramsay & Noakes (2001) Piercing the Corporate Veil in Australia. 19 Company and Securities Law Journal 250-271
Seal and Penrith. (2008). Live & Work in Australia, Crimson Publishing.
Case laws
Barrow v CSR Ltd (1988).
CSR Ltd v Wren (1997) 44 NSWLR 463.
Industrial Equity v Blackburn (1977) 52 ALJR 89,
James Hardie & Coy Pty Limited v Putt (1998) 43 NSWLR 554.
Salomon v A Salomon and Co Ltd [1897] AC 22.
Stone and Knight v Birmingham Corporation (1939).
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download