Student Number: (enter on the line below)
Student Name: (enter on the line below)
Trimester 1 2021
Assessment Weight: 50 total marks
- All questions must be answered by using the answer boxes provided in this paper.
- Completed answers must be submitted to Blackboard by the published due date and time.
Submission instructions are at the end of this paper.
This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit
Question 1 (7 marks)
Friends Milly Cook and Joel Reed have always dreamed of starting a business together. The problem is that they do not possess any prior experience setting up or running a business. Ideally, they would want the management of their business to stay as simple as possible. They also want to maintain secrecy so that outsiders cannot easily find out what the nature of their business is. Since they are both enthusiastic people they are both positive that once running, their business will fly off the ground. They foresee that they might have to source more money to grow their business. They want your advice on the best type of business structure they can choose given their circumstances. (Maximum 300 words)
ANSWER: ** Answer box will enlarge as you type
Question 2 (11 marks)
Tara Lambert, an accountant, controlled a few companies. One of these companies was Wolf Properties Pty Ltd, which was a real estate property development firm. One of Tara’s employees, Rowan Castillo, owned a company called Phantom Developments, which was in the business of buying distressed properties, renovating them and selling them for a profit.
A general manager, Samuel Peterson, was hired to run the companies under Tara’s overall control. Samuel frequently forwarded information to Rowan about properties that Wolf Properties planned to buy. This was in violation of Samuel’s agreement with Tara. Rowan then took advantage of this information for the benefit of his own company, Phantom Developments, by buying those properties before Wolf Properties could buy them.
Does Tara have any remedies against either Samuel or Phantom Developments? Discuss. (Maximum 200 words)
Question 3 (7 marks)
What is the reason why, generally speaking, only a company itself can initiate legal action against an executive director who violates her duties under the Corporations Act?
(Maximum 150 words)
Question 4 (11 marks)
Lee Finley, an entrepreneur, has just invented a cheap way for people to brew organic tea using a compact brewing device, which can be easily brought and stored anywhere. Lee is planning to register a company to promote his invention. He also wants his company to consist only of his close friends. He wants the words “Twister Tea” to be used in the new company’s name to identify it as being a dynamic business.
Lee’s foresees that by the end of the 2021 financial year, his new company will have gross assets of around $5 million, with gross revenues of $10 million, employing 20 full-time staff. Lee’s business plan shows that at the end of 5 years, his company’s assets would have grown to $13 million with projected revenues of $27 million. However, by that time, the company will only need to hire five permanent full-time staff, with another 64 staff employed part-time.
Answer the following questions:
- Explain what type of company Lee would apply for registration with ASIC (2 marks)
- How that company would be categorised at the end of its first financial year (2 marks), and
- Whether that company would remain in that same category in five years’ time? (7 marks) (Maximum 350 words)
Question 5 (7 marks)
Philippa is the promoter of a soon to be registered company, Visionetworks. Before the
Visionetworks is registered, Philippa negotiates and signs four contracts in the name of
the company. When Visionetworks is eventually registered, Philippa is appointed as a
founding director. Explain to Philippa how she can avoid being liable for the pre
registration contracts she entered into. (Maximum 150 words)
Question 6 (7 marks)
Outline the order of payments made by a liquidator and specify the relevant the subsections from the Corporations Act. (Maximum 150 words)
END OF TUTORIAL ASSIGNMENT
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