The University of Newcastle

• LEGL 2002

• LEGL2002: LAW OF BUSINESS ORGANISATIONS MODULE 1 BUSINESS ORGANISATIONS Week 1: Choosing a legal structure part A 1. Overview of Module 1 – Business Organisations A business should choose legal business structure most suited to nature of the business, its activities and needs. Needs to modify if a business changes – new legal structures to meet requirements Organisational structures: 2. Sole Traders -owned by one person -simple and inexpensive to establish -no legal distinction between the owner and the business -owner has unlimited liability for the business’s debts -more difficult to raise financial capital 3. Partnerships -Group generally between 2 and 20 people -Activities of the partners must be substantially commercial and ongoing in nature -mutual, shared or reciprocated rights and obligations -partnership is not taxed separately -capital can be combined -each partner has joint and severed liability -partnership decisions can be unanimous in some matters Regulated by the state and territory Partnership Acts. Sets out rights and obligations of the partnership, particular partners and the rules that determine the way the partnership is managed Partnerships can be Limited (partners with limited liability do not actively part. In operations. One or more general partners with unlimited liability manage the operations). OR. Incorporated limited partnerships: (separate legal entities, used in venture capital industry, attract special tax benefits) 4. Joint Ventures -An undertaking in which people come together in business, with each of them seeking an individual (not shared) profit -Participants remain legally separate -Participants can sell their individual interests -Separate manager may be necessary -Parties must take care to avoid becoming a partnership 5. Companies -A separate legal entity created by registration with the Australian Securities and Investment Commission (ASIC). -Owners often have limited liability -Extensively regulated by the Corporations Act 2001 -Members include owners, shareholders and investors. Operators/Managers = directors and senior officers, people who run and manage the company’s activities -External parties include customers and owners Week 2: Choosing a legal structure part B `1. Trusts A trust is a legal structure by which -one person (the trustee) -holds property (the trust property) -for the benefit of another person or persons (the beneficiary or beneficiaries) A trust is not a separate legal entity. However, the ownership of the assets is separate from the beneficiaries Settlor: creates the trust by settling a nominal amount on the trust Trustee: -legally owns and manages the trust prope