Question

Richard has an extensive olive grove in the Hunter Valley region of NSW. He has around 12,000 trees established and has recently purchased his neighbour’s adjoining property with a view to expansion. His business is flourishing and his two sons, David and Liam, have recently moved from Sydney to help him expand the business. They see opportunities opening up in new markets and would like to become further involved in the business. They want the family business to be in a form that would allow it to expand as necessary and also make it easier to raise the capital required for this expansion. They have also heard that there are tax benefits in operating a business through a company structure rather than as a sole trader or partnership. They persuade their father to take advice on turning the family business into a family-run company. There is some contention regarding the naming of the company. Richard prefers to name the company after themselves – “Ridali” – whereas David and Liam prefer the name “Rich’s Guaranteed Olives”, in honour of their father. Advise Richard and his sons of the steps that need to be taken to incorporate and register a company.

Answer 1

1. In incorporating a company, several steps are involved, the first and foremost of which is the selection of a name.

The rules to be followed in selection of a name are:

1. ?The name cannot be identical to an already existing company. Therefore, the name availability is to be ascertained with the ASIC before proceeding.
2. Certain terms such as bank, trust, royal, incorporated, etc have restricted usage.
3. The name should not have any illegal suggestions
4. The name should show the legal status of the entity, for example, an unlimited liability company's name would end with 'Proprietary'

?Since the two names do not contain any indication of legal status, they may choose the name that indicates the business, and register it as a business name that it can trade under, and have a separate legal name.

Once the name is decided, the constitution needs to be worked upon. In case the company does not want to draft a constitution, they may follow the replaceable rules in the corporation Act.

Directors, Secretary, and members need to be decided/appointed.

Share structure is to be decided upon, and the liability of the members.

A primary registered office of the company is to be decided, and in case the premises do not belong to them, they need to get the written consent of the owner.

Thereafter, registration requirements need to be complied with and a form is to be lodged with the ASIC.