Lee Finley, an entrepreneur, has just invented a cheap way for people to brew organic tea using a compact brewing device, which can be easily brought and stored anywhere. Lee is planning to register a company to promote his invention. He also wants his company to consist only of his close friends. He wants the words “Twister Tea” to be used in the new company’s name to identify it as being a dynamic business.

Lee’s foresees that by the end of the 2021 financial year, his new company will have gross assets of around $5 million, with gross revenues of $10 million, employing 20 full-time staff. Lee’s business plan shows that at the end of 5 years, his company’s assets would have grown to $13 million with projected revenues of $27 million. However, by that time, the company will only need to hire five permanent full-time staff, with another 64 staff employed part-time.

Answer the following questions:

1. Explain what type of company Lee would apply for registration with ASIC (2 marks)
2. How that company would be categorised at the end of its first financial year (2 marks), and
3. Whether that company would remain in that same category in five years’ time? (7 marks) (Maximum 350 words)

Lee Finley, an entrepreneur, has just invented a cheap way for people to brew organic tea using a compact brewing device, which can be easily brought and stored anywhere. Lee is planning to register a company to promote his invention. He also wants his company to consist only of his close friends. He wants the words “Twister Tea” to be used in the new company’s name to identify it as being a dynamic business.

Lee’s foresees that by the end of the 2021 financial year, his new company will have gross assets of around $5 million, with gross revenues of $10 million, employing 20 full-time staff. Lee’s business plan shows that at the end of 5 years, his company’s assets would have grown to $13 million with projected revenues of $27 million. However, by that time, the company will only need to hire five permanent full-time staff, with another 64 staff employed part-time.

Answer the following questions:

1. Explain what type of company Lee would apply for registration with ASIC 
2. How that company would be categorized at the end of its first financial year 
3. Whether that company would remain in that same category in five years’ time?