BULAW 2611 Organisation Law Assignment Semester 2, 2013 Purpose To enable you to apply problem solving skills; to research and compare characteristics of specific forms of business organisation, and...

BULAW 2611 ORGANISATIONAL LAW ASSIGNMENT
SEMESTER 2, 2013
Discussion of the various Business Structures:
PARTNERSHIP:
As defined in the Partnership Act, 1891, ―Partnership is the relation which subsists between
persons carrying on a business in common with a view of profit and includes an incorporated
limited partnership. But the relation between members of any company or association which
is—
a) incorporated under the Corporations Law; or
b) formed or incorporated by or in pursuance of any other Act of Parliament, or letters
patent, or Royal Charter:
is not a partnership within the meaning of this Act.‖
[1]
As per the section 7 of the Partnership Act 1895, meaning of partnership:
1. ―Partnership is the relation which subsists between persons carrying on a
business in common with a view of profit.
2. In deciding whether a partnership does or does not exist in any particular
case, the court shall have regard to the true contract and intention of the
partners as appearing from the whole facts of the case.‖ [2]
Such business structure is the one in which two or more persons associate together in order
to carry on business venture or activity with the main objective of earning profits. A
Partnership is not a separate legal entity separate from its partners. The business assets and
liabilities are jointly owned by all the partners. A written agreement is prepared that provides
the role and authority of each partner, the capital contribution and the procedure for
settlement of any dispute among the partners. In case, of partnership, the liability of each
partner is unlimited.
COMPANY:
As per the Corporations Act, 2001 Section 9, company is defined as under:
―Company means a company registered under this Act and:
(c) in Parts 5.7B and 5.8 (except sections 595 and 596), includes a Part 5.7 body; and
(d) in Part 5B.1, includes an unincorporated registrable body.‖
[3]
A company is a separate legal entity that in his own name holds its assets. Shareholders are
the owners of the company and is managed a board appointed by the shareholders named as
Board of Directors. Also, company directors and employees can also be its shareholders.
COOPERATIVES:
As per the Co-operatives Act, 1997, 4-Definitions, Cooperatives have been defined as under:
―Co-operative means a body registered under this Act as a co-operative and includes an
association or federation‖
[4]

Such co-operatives are set up as a voluntary trading organisation that is framed for the
economic welfare and not for the maximisation of the profits. There should be atleast 5
members to form a co-operative, who are given equal voting rights, irrespective of the
amount of capital investment made by each member. Such organisations have primary
objective of providing services to its members and not helping in any financial gain to them.
It is just like a company when it comes to separate legal entity and limited liability of
members, directors or employees.
The activities of Co-operatives include agriculture, retail, marketing, livestock / bloodstock,
food, culture, etc. The members of the required to have an some kind of connection with the
activities of the co-operative.
Hence, Co-operatives are:
a) A body-corporate that is registered under the Co-operative Act, 1997 and requires
atleast 5 members for formation
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#this_act
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s595.html
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s596.html
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#body
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#registrable_body
b) The membership position of which is open to all the people interested who are willing
to use the services and have accepted to serve the responsibilities of a member.
c) Such business structures are democratic in nature in which the controlling power is
with the members and they are only responsible for set up of policies and actively
participate in the decision making.
ADVANTAGES AND DISADVANTAGES OF EACH BUSINESS STRUCTURE
PARTNERSHIP
Advantages:
1 Easy to set up and low establishment cost
2 The partnerships firms are not required to make lot of reporting to various
authorities
3 The responsibilities, workload and losses are shared among the management
and the staff
4 Partnership provides a larger scope for tax planning as compared to other
structures
5 More people mean more combined skills, knowledge and experience. Hence,
this combined strength leads to better product/ service
6 Neither superannuation contributions are required to be made nor is the
requirement for payment of Worker’s compensation insurance from the
partner’s profits or drawings, since partners work in the capacity of owners
and not as employees.
7 Partners have free access to capital
8 Like formation, dissolution of partnership is also simple.
9 Partners can set-off the share of business losses from their personal income.
10 Such structures are flexible in nature
11 Procedure for reconstitution of the legal structure in case of changes in
circumstances is simple.
Disadvantages:
1 Partners are likely to enter into disputes over the issues of sharing of profits,
control, business decisions, etc.
2 Partnership provides for joint and several liability partnership, because of
which, every partner will be responsible for the acts, debts and liabilities of
other partners.
3 Difficult to change ownership since, if ownership is required to be changed,
it ultimately results in establishing a new partnership.
4 The personal assets of the partners are not protected and unsecured, since, in
case of insufficient business assets, partners may be required to pay the
business assets out of their personal assets.
COMPANY
Advantages:
1 The liability of the shareholders is limited and the maximum loss can be the
amount paid for the purchase of shares and only unpaid amount on shares
can be called from them.
2 More acceptable as a commercial entity
3 Because of the imputation tax system, the shareholders get credit of the tax
paid by the...