6) Why do you think that public companies are subject to more Corporations Act regulation than proprietary companies?

7) Explain the role of ASIC? Who does ASIC protect and why?

8) What do you think are the advantages and disadvantages of respecting the corporate veil?

9) Tom is an ambitious amateur theatrical director who sees a future in the commercial promotion of small-scale amateur dramatic productions. He has been told of the various forms of business organization, and he asks your advice about the formation of a company. He envisages that 2 of his friends would be prepared to invest substantial sums of money and that up to 30 theatrical acquaintances will be prepared to make a nominal investment as a gesture of support.

Which of the following is false?

(i) Tom can form a proprietary company

(ii) Tom can form a no liability company

(iii) The new company must have a registered office

(iv) The new company must have a common seal

10) Lotti and Cindy are presently partners in a business that operates a second-hand book shop. The partnership agreement does not specify the proportion of each partner's share in the partnership. They have two employees working for the business. The shop is located on leased premises. The business is doing well and has been profitable for them. An opportunity has arisen to purchase the business of two second-hand bookshops in nearby suburbs. Lotti and Cindy are keen to expand their business. They will need a large injection of funds to purchase the additional businesses. They will need to appoint a manager to at least one of the shops, as they will be fully occupied by the other two. Lotti is concerned about her potential liability for the debts and liabilities of the partnership. Also, she is concerned about the future of the business if one of them should decide to leave, as the lease is in both of their names.

Having regard to the above facts only which 2 of the following alternatives are false:

(i) Lotti and Cindy are currently equal partners.

(ii) If Lotti and Cindy want to form a company and ask 3 friends to join the business and contribute funds to help purchase the additional bookshops the company they form must be a public company listed on the ASX.

(iii) If Lotti and Cindy form a proprietary company, they will expand their business because a proprietary company has perpetual succession.

(iv) Lotti and Cindy could be directors of any proprietary company they form but they will need at least one more director to comply with the Corporations Act.