Question

1. Mr. Millionaire and his wife wish to start a business in New Zealand and have been told that company structure is now used by most businesses rather than partnership.

1. You are required to advise Mr. Millionaire on the legal reasons businessmen favours company incorporated under the Companies Act 1993 over partnerships as their business structures.
2. In addition please include in your advice a brief explanation on the incorporation/set-up process of those business structures.

2.Required / ILAC Topic (Learning Outcome Two)

You are required to read the judgment by Justice McGregor in the case South Pacific Airlines of New Zealand Ltd. v Registrar of Companies - [1964] NZLR 1 and identify the ISSUE(S), LAW, APPLICATION and CONCLUSION using ILAC format.

Answer 1

a) Most of the business prefer the business structure under the companies act 1993 because under the companies act the liability of the shareholders and the directors are limited to the extent of the stock hold by them in the company. Company has a seperate legal entity and it is considered as a seperate person under law. However in case of a partnership firm the liability of the partners are not limited. They are jointly and severally responsible for the liabilities of the partnership firm. Therefore most of the business prefer the structure of companies act.

b) The business required to register itself as a company should fulfill the following requirements:

• A name
• 1 or more shares; and
• 1 or more shareholders, having limited or unlimited liability for the obligations of the company; and
• 1 or more directors, of whom at least 1 must—

(i)live in New Zealand; or

(ii)live in an enforcement country and be a director of a body corporate that is incorporated in that enforcement country under a law that is equivalent to this Act.

For the registration under the companies act the business should:

1. The company should apply for the registration, either alone or together with other person under this act.
2. The company should give application for registration under the prescribed format. The format should be signed. And all the requirements should be completed. The application must statte the name address and the directors details etc in the format.
3. As the registrar is satisfied with the format and requirements are fulfilled he should register the company.
4. A certificate of incorporation is issued by the registrar.