Setting Up the Corporation: Incorporation and its Effects

Question 1

What does Incorporation mean?

Answer 1

• To make a new company

Question 2

What does Registration mean?

Answer 2

• Process for foreign companies to be recognised by AUS Law

Question 3

What is ‘identical’ or ‘unacceptable’ in the Act?

Answer 3

Schedule 6

Question 4

What are the Formalities for Company

Answer 4

Proprietary - Pty Ltd OR Proprietary Limited

No Liability - no liability
Unlimited Proprietary - Proprietary

Question 5

What are the CONSEQUENCES of registration?

Answer 5

• Separate legal entity
• s24 = company has capacity and power of individuals AND all powers of body corporate (cancel, issue shares)

Question 6

What are 2 ways to classify Corporations?

Answer 6

1. Liability of Members
2. Public or Private Company

Question 7

What are 4 ways for Liability of Members?

Answer 7

1. Limited by Shares - ‘limited liability’ = Shareholders only pay of what they OWE if company goes bankrupt
2. Limited by Guarantee - no shares - members only liable for what they were guaranteed to contribute if company wounded up
3. No liability - No liability // Companies with a PURPOSE ONLY FOR MINING
4. Unlimited Liability - If assets NOT sufficient –> members MUST contribute to company’s loss

Question 8

What are the RULES and FEATURES of a Pty Company?

Answer 8

1. No more than 50 shareholders
2. Be limited by shares or be an unlimited company
3. Lesser degree of regulation + higher degree of privacy
4. easier to maintain

Question 9

Benefits of Pty Ltd

Answer 9

• NO need for annual meetings (cheaper)
• Directors have a BROAD discretion to allow transfer of shares

Question 10

Benefits of Public

Answer 10

• More investment opportunity
• Build better reputation