A group of your friends and you are very excited about setting up a business, in Indonesia selling imported home accessories and furniture sourced from all over the world. There are eight of you, who are keen to invest

You do not expect the business to need more than US$300,000 in investment from the shareholders nor generate more than US$100,000 in profits in total for the next 5 years. Depending on the growth of the business, you may also need to approach banks for loans in the next few years.

You read that the incorporation of a limited liability company would be most beneficial in protecting the shareholders. Your other friends do not agree and want a simpler form of a business entity because they do not have the time to manage all the complex procedures relating to forming and maintaining a company. They argued that there are no advantages to setting up a company.

Prepare a detailed report so that your friends can read it and understand:

- the reasons why a limited liability company would be the appropriate legal entity for the proposed business and how such a legal entity would be beneficial to the shareholders; the legal requirements related to the establishment, administration and dissolution and winding-up of a limited liability company

You should anticipate the questions that your friends (as investors) are likely to ask and real-life commercial issues that would impact on the above, and include points and explanations in your report that will address such questions and issues. In your report, you should cite the relevant statutory provisions to support your points. As part of proper formatting for a report, you should consider the use of headings, sub-headings, section numbers and diagrams to enable ease of understanding of the points in your report. Where relevant, you should also include a sample of any key document that relate to the rights and obligations of directors, commissioners and shareholders

Marking Scheme The breakdown of the marks is as follows:

Introduction and Conclusion

Reasons why a limited liability company is appropriate for the business

Description of the establishment process of a limited liability company

Administration of a limited liability company 40 marks Dissolution and winding-up of a limited liability company