Facts

Hamish is keen to start a new business with low risk. His friends, Joseph, Gary, and Paul are recently retrenched from their jobs. They also want to join the new business with Hamish. A main objective of the business is to make new sleepwear for kids. Joseph has previous experience of working in a garments company whereas others have no experience. Hamish wants to keep tight control on the business since he does not have enough trust on Joseph, Gary, and Paul. He also did not have any connection with them for a long time. After an initial discussion, they all met Jahid, a student who has recently completed his BLAW5016 unit. Jahid advised them that they should start a joint venture business so that they can use their individual skills and knowledge. Gary thinks that it is not a good idea to form a joint venture business because he does not have any skill in sleepwear products. Gary, however, thinks that they should form a partnership business instead of a joint venture. But Paul does not like the idea of a partnership business since he has bad experience with a partnership business before. Paul is, however, concerned about any unpaid investment.

Hamish has read news about a company named Zamberro Pty Ltd, which signed a contract with Adone Bakery located in Maddington to supply fresh bakery products for its upcoming function. The company has a constitution. Clause 15 of the constitution states that Zamberro's directors cannot sign a contract without taking consent of the members if the price of the contract is more than $10000. Adone had previously dealt with Zamberro twice and supplied cakes and cookies for its year end functions in 2022 and 2021. That is why Adone signed a contract with Zamberro with the contract price of $11000. A director of the company named Beatrice signed the contract with Adone Bakery in late August who was removed from the office afterwards by the company. The new director named Ted (who is also the Managing Director of the company) does not like the sound of Adone Bakery's owner named Bruice, when he called him for a discussion on the date and time of delivering the products. Ted does not want to perform the contract because the contract is beyond the object of the company which was established to run a business of residential property development. Adone Bakery wants to enforce the contract.

Ted was also the person involved in signing a lease agreement with Max Property Pty Ltd on behalf of Zamberro Pty Ltd. The contract price was $300,000 as it is a twenty-year lease contract. He signed the contract in 2020 and the company was registered in June 2021. Since registration of Zamberro, Ted had been in the USA where he stayed to complete his law degree. Zamberro did not have any contact with Ted for the last few years and the directors during the time searched for more suitable land around Perth Regional area to construct a new factory for the company. Finally in early 2023, directors of Zamberro decided to purchase a new land with a cheap price on behalf of the company. Ted has recently received a written agreement from the vendor of the land in which Ted put a signature as the agent of the yet to be formed company in 2020. The vendor made a legal demand of the land price from Ted. In the notice, the vendor claimed that Ted must pay the price of the land as Ted had the intention to make secret profit by purchasing the land from him. This is because the land had to be in fact purchased by Ted as he signed an agreement for sale of the land with Max Property Pty Ltd. However, as the land price went up, rather than purchasing the land for himself, Ted purchased the land for the yet to be formed company, Zamberro. Ted did not want to comment on this since he did not want this to expose to anyone. Members of Zamberro think that they should remove Ted as a director or seek remedies from Ted. Ted thinks that he is not liable to pay the price of the land as he purchased the land for the company.

In June 2023, members of Zamberro made a request to the directors to hold a meeting. Members intended to discuss about changing the constitution of the company and passing a resolution so that the company can issue more shares of the company and discuss whether it is a good idea to invest in the residential property market. However, directors did not want to follow the request. They argue that property market investment is not a good idea at this stage. But members have been serious about it, and they want to hold the meeting at any cost for the best interest of the company. Later, directors have changed their mind. Accordingly, without holding the meeting of members, they organised a directors' board meeting. However, unfortunately after the company has invested money in the residential property, the company fell into financial trouble. Because of the financial trouble, in August 2023, the company could not pay its first instalment of the loan taken from ABC Bank. Facts revealed that the director, Jeffrey informed the bank before taking the loan that the loan amount would be used to invest for constructing a shopping complex in Joondalup area. Indeed, this was done to avoid delay in releasing money for the company.

Jeffry argued that there is no wrong in this false statement since whatever he has done is for the sake of the company. He contends that he has no liability for the loan.

REQUIRED:

1.With reference to sections of the Corporations Act 2001 (Cth), advise Hamish. Hespecifically wants to know about a business structure that will meet his requirements.

NOTE: You are required to use the 4-steps process in answering the above questions. There are four paragraphs in the facts which follow the questions sequentially. When you answer a question, please focus on a relevant module and relevant area. Your word limit is 2000 words excluding footnotes. You are not required to add a bibliography of your sources. Try to be concise and accurate in your answer. You are not expected to discuss the facts from the cases.