Question

James, a sole trader, is considering registering his business as a company. James wants to establish limited liability for himself as a director, shareholder, and employee of the company. Advise James on the following questions a) and b) as stated below: a) Does the creation of a company absolutely remove him from any potential liability for injury, loss, or contracts made by his company? (3.5 marks) b) Would James need any interactions with the Australian Securities and Investment Commission (ASIC) or the Australian Securities Exchange (ASX) if he set up a company? (3.5 marks)

Answer 1

a)The creation of the company cannot remove him from potential liability.It is the obligation or liability of the creator to take responsibility for the injury, loss or contract. The loss can be limited by the agreement made in the contract. The limited liability can be implemented.

b) While starting a company, it is useful if he listed his company. If the basic listing requirements like number of shareholders, free float, company size is satisfied he can list it in the ASX (Australian Security Exchange). Listing enables the company to raise capital while strengthening it's capital and structure.