Formation Of Proprietary Company Essay

2263 WordsSep 7, 201610 Pages
Question One The first issue arose on the grounds of factors, which were taken into consideration by Haili and John at the time of formation of proprietary company rather than Partnership Company. It can be assumed that in deciding the structure, the features of the two types of companies and both the positive-negative perspectives of them were given attention before the final mind set. On one hand, the salient features found under the Partnership heading were as follows: a) Such companies can be formed through an oral or written agreement, though the written agreement was not mandatory but common. b) Minimum two persons were required and maximum 10 persons in case of the banking business and 20 in other types of business. c) The business name must be registered with ASIC if the name was not under each partner. d) Sharing of profit among the partners was to be done according to the agreed ratio and vice versa in terms of any losses. On the other hand, the characteristic of proprietary company were discovered to be as follows: (a) privately held company that could be either unlimited or limited. (b) Such type of company was known to have a separate legal entity and as per the decided case of Salomon v Salomon & Company Ltd [1897] , it was, therefore, distinct from its directors, shareholders, promoters and other members. (c) Governed by a separate law, so it had right, duties and obligation. As a result, such company can have assets as well as liabilities and make
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