Corporate Structure

In: Business and Management

Submitted By jianpang
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CORPORATIONS LAW TRIMESTER 2, 2011 RESEARCH ASSIGNMENT 1

Assessment Value: 20%

Instructions:

1. You must submit your assignment in accordance with Holmes Institute’s policy on submission of assessments. 2. Maximum marks available: 20 marks. 3. You should refer to the prescribed textbook, other recommended textbook, and relevant Acts and cases in your answer. 4. Maximum word length is 2000 words. 5. This paper is due on Friday 19thAugust 2011 by 5pm.

Question 1
Introduction to Companies

King Kong is a very successful large banana wholesale business owned by Mr Ken Kong. The price of Bananas significantly increased in the last financial year and as a result Mr Kong earned more than 20 million dollars in the last financial year. His accountant suggested that he reconsider his business structure and advised him to incorporate. Although his accountant tried to explain the differences between a proprietary and public company, and the different types of corporations, he didn’t understand him.

You are a family friend of the Kong family and he calls you up to explain the different types of corporations and the differences between proprietary and public companies. He also wants to know that if he changes his mind in the future, whether he would be able to convert to a different company status at any time.

Assist Mr Kong by answering his call.

End of Assignment one.

Hi Ken,

As per suggested by your accountant, a company structure for your business is most recommended given its recent increase in profits. The main benefits of a company structure for you are its tax advantages and the fact that it provides limited liability to its owners. By setting up a company, the profits from King Kong will be taxed at a flat company tax rate of 30%. This is a much lower tax rate as…...

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