Analyse the following scenarios and recommend what type of company should be adopted: Alan would like to form a company, by advertising the offer of shares. Bob would like to form a company with his two brothers to manufacture widgets. Chris would like to form a company to manufacture toys. However, he does not want his employees, friends or family to know how well the company is doing. David is a founder member of a local charity. The charity would like to set up a shop which can be used to sell locally made goods. Any profits made by the shop will be ploughed back into the charity. The bank is happy to lend $100 000 to get the shop started, but has asked for some security. (Analyse legal concepts of business organisational structures, and underlying regulation including the application of these to: sole traders; partnerships; corporations; trusts; agencies; joint ventures; incorporated associations).

Question

Analyse the following scenarios and recommend what type of company should be adopted: Alan would like to form a company, by advertising the offer of shares. Bob would like to form a company with his two brothers to manufacture widgets. Chris would like to form a company to manufacture toys. However, he does not want his employees, friends or family to know how well the company is doing. David is a founder member of a local charity. The charity would like to set up a shop which can be used to sell locally made goods. Any profits made by the shop will be ploughed back into the charity. The bank is happy to lend $100 000 to get the shop started, but has asked for some security. (Analyse legal concepts of business organisational structures, and underlying regulation including the application of these to: sole traders; partnerships; corporations; trusts; agencies; joint ventures; incorporated associations).

Answer 1

1. For Alan, who wants to advertise the offer of shares, a suitable company structure would be a public limited company (PLC). This type of company allows for shares to be offered to the public and traded on a stock exchange. It is the most suitable structure for raising large amounts of capital from the public.

2. For Bob and his two brothers who want to manufacture widgets, a suitable company structure would be a private limited company (Ltd). This type of company limits the liability of the owners and allows for the ownership of the company to be shared among a small group of individuals.

3. For Chris who wants to manufacture toys but keep the financial information confidential, a suitable company structure would be a private limited company. This type of company allows for the financial information to be kept private and limits the liability of the owners.

4. For David and the local charity looking to set up a shop, a suitable company structure would be a charitable incorporated organization (CIO). This type of company structure allows for the charity to have legal personality and limited liability, while also ensuring that any profits made can be ploughed back into the charity's activities. Additionally, the security required by the bank for the loan can be provided by the assets of the charity itself.