Levi has met with a number of friends from his university days and they agree to start up a new business which will import computer microchips from.various parts of the world, which will be marketed to existing and prospective ICT companies. The company Comp-Chips Pty Ltd is proposed. They all agree that Levi is to organise the registration of the company and to ensure all the appropriate formalities are complied with. Each friend has promised to put up $15,000 individually, with a proposed capital sum of $60,000 to be established for the new company.

Levi instructs a local solicitor to prepare the necessary documents for the new company. He orders 2,000 microchips to be delivered to his home address, which is to be the headquarters of the new company. Levi has also contracted Picture-This Pty Ltd t a logo for the new company's products.

After two weeks, none of the friends have been able to contribute any money to the venture, due to different personal problems and one of the friends has in fact changed his mind about the venture but has not informed the rest. None of the participants except Levi have done anything in regard to the proposed company.

The solicitor soon informs Levi that the company is ready for registration and presents a bill for her work. The microchips have been delivered and the invoice needs to be paid. Picture-This Pty Ltd has completed the logo and design work and have also presented their invoice.

At this time, no company has been registered, and the likelihood of any future registration is very doubtful. Levi is worried and seeks your advice on whether he is liable and whether he can force his friends to pay the expenses for the company that was to be formed.

PART A:

Explain the meaning of the term "promoter" and set out who would be classified as a promoter for a company that is yet to be registered and outline their responsibility relating to profits and fundraising.