...:Topic 1:Introduction and Regulatory Framework- Regulation can relate to two things: Regulate what an organisation can or must do (eg trade, pay tax, employ staff, pay debts), Regulate how an organisation functions (eg how it comes into being, how it is managed and operated and how and when it ceases to be). Why are corporations used (good and bad)? To allow for investment, To allow capitalism to flourish, To permit the sharing of risk, To permit investors to shelter from risk, To permit investors to deny responsibility, To distribute responsibility, To misallocate resources, To allow efficient allocation of resources. Two theories: Contractualist theory, Stakeholder theory. Regulation tends to try to connect the two theories by acknowledging the importance of the corporation in encouraging economic growth and appropriate risk taking BUT also recognising that there should be some control over corporations given their importance to society (as a conduit or pipeline through which resources are channelled into goods and services). Where is this regulation?-Corporations Act 2001, Australian Securities and Investments Commission Act 2001, These are both federal or commonwealth (central government). Subordinate legislation also (regulations under these Acts plus ASX listing rules, statements and Guides, Accounting Standards). Finally, A lot of the important principles relating to corporations and their responsibilities have evolved via case law. The (Corporations) Act has been described...
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...Chapter 25 Bankruptcy, Reorganization, and Liquidation ANSWERS TO BEGINNING-OF-CHAPTER QUESTIONS 25-1 Bankruptcies occur in firms of all sizes. Small firms, with fewer creditors, are often able to work out informal settlements and thus avoid the time and expense of formal bankruptcy. Ross Corporation, described in Question 3, is probably too large, and it has too many creditors, to work out an informal settlement. If Ross attempted to resolve its problems informally, the attempt would probably fail, and then it would have to resort to the federal bankruptcy court. Note that if there had been fewer creditors, and particularly if most of the debt were owed to a few banks, then the chances of an informal resolution would be better. But with many holders of the publicly traded bonds, 15 banks, and 250 unsecured creditors, there would probably be too many holdouts to reach an informal resolution. 25-2 The judge in a federal bankruptcy proceeding can abrogate all contracts, including labor contracts. If a contract requires payments greater than the company’s cash flows can support, then the judge can order that payments be scaled back to a level the company can afford. Labor contracts were abrogated for a number of firms that were hit with asbestos suits, notably Johns Manville, and currently several airlines are in bankruptcy proceedings under which labor contracts will likely be changed. 25-3 a. As noted above, is probably too large, and it has too many creditors...
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...Tutorial One Part A: The Birth of a Company Alf, Callum, and Gary all go to law school together. One night when cramming for exams, Callum laments out loud that the case reports on Westlaw were insufficient for helping to determine the ratio decidendi and the weight that Law Lords place on them when making their rulings. Gary, a whiz in computer science and algorithms, writes a program that can trace the cases found in a particular judgement and then map how often subsequent courts use those cases in their judgements. In practice, the program provides practitioners and students of the law valuable insight about the most relevant cases to discuss when making submissions to the court. Alf, who took economics and accounting as his first degree, draws up a business plan to help get the project off the ground. Callum becomes the front-man for soliciting sales of the app and begins travelling the country promoting it, which is now branded as the “Law Street Journal” to practitioners and legal academics. Callum enters into service level agreements with the University of Strathclyde and several high profile law firms to deliver and support the increasingly popular app at subscription prices of £5000 per annum. Alf begins to solicit investors and opens a bank account to put the money raised to help fund the development of the business. Unknown to Alf and Callum, Gary develops a computer program that scans all Westlaw judgements illegally mining data from their massive database of case...
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...recommendations is to be submitted by the 27 March 2015. The report will included the following points: * Voluntary liquidations * Compulsory liquidations * Administrative recievers 2.0 Proceedure In order to complete the report will require the use of the following resources: * The library * Textbooks * College notes * www.companieshouse.gov.uk * Relevent government websites 3.0 findings Insolvency is a formal measure used to deal with the companies debts. The initiation or the termination of insolvency must be notified to Companies House Edinburgh on form SE WU01. When a company is declared insolvent the reciever or administrator has a duty to send the Secretary of State for Business, Innovation and Skills, a report on the conduct of all directors who were in the office in the last 3 years of the companys trading. The Secretary of state will then decide whether it is in the public interest to seek a disqualifaction order against a director. The most commonly reported conduct are as follows: * continuing the companys trading when the company was solvent. * Failing to keep proper accounting records. * Failing to prepare and file accounts or make returns to Companies House Edinburgh. * Failing to send in returns or pay to the crown any tax that is due. 4.1 Voluntary liquidation A corporate voluntary arrangement or CVA is” an arrangement when a company makes an agreement with its creditors by proposing a composition...
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...Liquidation vs. Dissolution Myron D. Roberts Strayer University Advanced Federal Taxation ACC 317 Professor Sondra Smith September 7, 2012 In this paper, I will identify the differences between when a corporation liquidates and when it is dissolved. Companies no longer viable often have no alternative but to cease operations. When a company terminates its operation, it goes through a process known variously as liquidation and dissolution. Even though these terms are often used to describe the entire method of shutting down a business, they are actually two separate stages in the course of action. Discuss the differences between a corporation that is liquidated and one that is dissolved. “When a company goes out of business, there is a set of legal processes by which the company will typically go through, including the liquidation of assets and the distribution of the proceeds to creditors and owners. This entire process is known as dissolution. Therefore, the major difference between liquidation and dissolution is that liquidation is a part of the overall dissolution process” (Richards, 2012). “Liquidation refers to the complete sale of the business assets. “This means the conversion of something into cash. In the context of the business, this involves selling the assets of the company. This may be the best option if the company has no other option when business closure is imminent, such as a merger or acquiring emergency capital” (Johnson, 2012). Dissolution...
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...Introduction A company is an entity that is treated as a legal person by the government. However, it is not as easy as it seems to operate a company. There are many challenges that companies face during the course of their operations. Depending on the degree of the problem, some companies are likely to wind up. Before understanding how a company can be wound up, it is important to understand how to form a company and what types of companies exist. Formation of a Company A company can be formed in numerous ways. To be specific, the main concentration shall be placed on formation of a company by registration. Registered companies are formed by registration under the Companies Act CAP 388. This is the most common way of forming a company. According to Section 13 of the Companies Act, There are two main types of companies; public company and private company. Private companies are divided into three different types. A private company limited by shares; a company limited by guarantee and an unlimited company. Types of Registered Companies A private company limited by shares, usually called a private limited company (Ltd.) has shareholders with limited liability and its shares may not be offered to the general public, unlike those of a public limited company (plc). It is a company whose liability to creditors of the company is limited to the capital originally invested, i.e. the nominal value of the shares and any premium paid in return for the issue of the shares by the company...
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...Becker CPA Review, PassMaster Questions Lecture: Regulation 7 CPA PassMaster Questions–Regulation 7 Export Date: 10/30/08 1 © 2009 DeVry/Becker Educational Development Corp. All rights reserved. Becker CPA Review, PassMaster Questions Lecture: Regulation 7 Agency CPA-01299 Type1 M/C A-D Corr Ans: C PM#1 R 7-01 1. CPA-01299 Lw R02 #5 Page 12 Lee repairs high-speed looms for Sew Corp., a clothing manufacturer. Which of the following circumstances best indicates that Lee is an employee of Sew and not an independent contractor? a. b. c. d. Lee's work is not supervised by Sew personnel. Lee's tools are owned by Lee. Lee is paid weekly by Sew. Lee's work requires a high degree of technical skill. CPA-01299 Explanation Choice "c" is correct. A clear example of an employee is one who works full time for the employer, uses the employer's tools, is compensated on a time basis, and is subject to supervision of the employer in the details of the work. A clear example of an independent contractor is one who has a calling of his own, who uses his own tools, is hired for a particular job, is paid a given amount for the job, and follows his own discretion. Thus, payment on a weekly basis is an indication that a person is an employee rather than an independent contractor. Choice "a" is incorrect. If Lee's work is not supervised by Sew's personnel, per the above, that would be an indication of independent contractor status. Choice "b" is incorrect. Per the above, Lee's...
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...Tutorial Week 13 Blackboard Questions and Solutions Chapter 21: Insolvency and Liquidation REVIEW QUESTIONS 1. Outline the role of an administrator appointed to a company which is insolvent. Once an administrator is appointed, what roles do the directors of the company have? If a company is insolvent, the directors can get themselves into serious trouble with the Law if they allow the company to continue to trade. According to Section 436A of the Act, directors are expected to appoint a voluntary administrator to the company even before it becomes insolvent: (1) A company may, by writing, appoint an administrator of the company if the board has resolved to the effect that: (a) in the opinion of the directors voting for the resolution, the company is insolvent, or is likely to become insolvent at some future time; and (b) an administrator of the company should be appointed. Section 437A(1) spells out the role of an administrator: (1) While a company is under administration, the administrator: (a) has control of the company’s business, property and affairs; and (b) may carry on that business and manage that property and those affairs; and (c) may terminate or dispose of all or part of that business, and may dispose of any of that property; and (d) may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration. According to ASIC’s website and s. 438A of the Act, the...
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...life of a company is put to an end). Thus, the winding up is the process of putting an end to the life of the company. And during this process, the assets of the company are disposed of, the debts of the company are paid off out of the realized assets or from the contributories and if any surplus is left, it is distributed among the members in proportion to their shareholding in the company. The winding up of the company is also called the ‘liquidation’ of the company. The process of winding up begins after the Court passes the order for winding up or a resolution is passed for voluntary winding up. The company is dissolved after completion of the winding up proceedings. On the dissolution, the company ceases to exist. So, the legal procedure by which the existence of an incorporated company is brought to an end is known as winding up. Consequences of winding up Some important consequences of winding up of company are: As regards the company itself: Winding up does not mean that the company has ceased to exist. The company exists as a corporate entity with all the rights of such entity, with only change that its management and administration is to be carried on through liquidator / liquidators till the final dissolution of the company. As regards the shareholders: A new statutory liability as contributories...
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...Becker CPA Review, PassMaster Questions Lecture: Regulation 7 CPA PassMaster Questions–Regulation 7 Export Date: 10/30/08 1 © 2009 DeVry/Becker Educational Development Corp. All rights reserved. Becker CPA Review, PassMaster Questions Lecture: Regulation 7 Agency CPA-01299 Type1 M/C A-D Corr Ans: C PM#1 R 7-01 1. CPA-01299 Lw R02 #5 Page 12 Lee repairs high-speed looms for Sew Corp., a clothing manufacturer. Which of the following circumstances best indicates that Lee is an employee of Sew and not an independent contractor? a. b. c. d. Lee's work is not supervised by Sew personnel. Lee's tools are owned by Lee. Lee is paid weekly by Sew. Lee's work requires a high degree of technical skill. CPA-01299 Explanation Choice "c" is correct. A clear example of an employee is one who works full time for the employer, uses the employer's tools, is compensated on a time basis, and is subject to supervision of the employer in the details of the work. A clear example of an independent contractor is one who has a calling of his own, who uses his own tools, is hired for a particular job, is paid a given amount for the job, and follows his own discretion. Thus, payment on a weekly basis is an indication that a person is an employee rather than an independent contractor. Choice "a" is incorrect. If Lee's work is not supervised by Sew's personnel, per the above, that would be an indication of independent contractor status. Choice "b" is incorrect. Per the above, Lee's...
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...produce much needed products that can help overcome the existing odds for the company. In addition the company can also diverse in expanding its business to other areas; diversification is suggested for the company in this specific country because the company and the products are new to the market and previous information shows that low cost products work in Ethiopia. Nonetheless Harley Davidson can gain profits in others sectors if develop. However if Harley Davidson decides that diversification is not the best exit strategy and they want to close the business and take its losses, Liquidation of Assets would be the exit strategy suggested instead; only if no debt is pending. This will allow the company to find a suitable buyer willing to buy all the products at a reasonable price, remember that HD products are worldwide known quality products that most men wish to have. Nonetheless in liquidation negotiations not much money is gained. Shutting down the company will be another option that will suit Harley Davidson as well. This is a common exit strategy and often use by many business owners whom have been struggling with their business; however, the reasons why to shut down the business are many. The procedure to shut down is as follow, there is a need to settle all outstanding debt associated with the company, liquidate assets, distribute final dividends to investors,...
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...liquidated. The question therefore is: Is there a significant correlation between the number of building plans being approved and the number of companies in the construction industry being liquidated? For ease of reference “Building Plans” will mean the number of building plans being approved and “Liquidations” will mean the number of companies in the construction industry being liquidated. DATA AND HYPOTHESES All data used in this assignment was obtained from Statistics South Africa (http://www.statssa.gov.za/timeseriesdata/excel_format.asp) and extracts thereof are provided in table format in Appendix A. The time period under evalution is January 2000 to October 2011. The raw monthly data was used. The null and alternative hypotheses are: H0: There is no significant linear relationship between Liquidations (dependent variable) and Building Plans (independent variable). H1: A significant linear relationship exists between Liquidations and Building Plans. RESULTS AND DISCUSSION 1 Description of data Excel was used to calculate descriptive statistics for the Building Plans and Liquidations. The results are as follows: |Liquidations |Building Plans | |Mean |24.18309859 |Mean |6716.640845...
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...MASENO UNIVERSITY ABA 302:- COMPANY LAW WINDING UP DAVE LUNG’AHO SIGANGA This is the legal process by which a company’s legal existence is brought to an end. It is carried through by a person known as a liquidator who wraps up the company operations by taking control of the Company, collecting the company’s assets, pays the Company’s debts, and then distributes the surplus among the members of the company. The liquidation process involves inter alia; A] Settling the list of contributories B] Collecting the company’s assets; C] Paying the company’s debts and other liabilities D] Distributing the surplus assets among other contributories Priority of Payment 1. Liquidators/ official receivers fees 2. Expenses incurred by the liquidator/ official receiver 3. Petitioner’s expenses 4. Preferential debts 5. Unsecured Creditors 6. Repayment of share capital as per the Company’s Articles of Association 7. The residue will be distributed to the members of the Company Relevant Law The process of winding up is governed by the Company Act Chapter 486 Section 212 [1] provides that the winding up may be either; A] A compulsory winding up by the court or 1 B] A voluntary winding up, which may be either a member’s voluntary winding up, or a creditors voluntary winding up; or C] A winding up subject to the supervision of the High Court. Who may petition? a) The Company Itself: - The Company may by special resolution commence winding up proceedings. It is a Company decision to wind up, not a...
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...Case I Walnut Street Four The petition for involuntary bankruptcy for the form Walnut Street Four should be granted. The partnership is being forced in an involuntary bankruptcy by its creditor which in this case the partner Bernan is filing bankruptcy. The partner Bernan, as a good chance of the case being file because the general partnership owes their business more than $10,775. The Walnut Street Four fits into the group that can file bankruptcy since it’s either a farmer, nonprofits, banks, insurance companies, credit union or saving and loan institutions. The group as missed many payments at a large amount. In order for most case to process a debtor has two have twelve or more creditor and three of them has to sign the petition for bankruptcy. In this case the creditor is filing because the partnership stop making payments and now is in debt over $380,000. Since the other two partnership choose to not make payments it makes sense for Bernen to file Chapter 7 to completely dissolve the business. When filing a Chapter 7 in bankruptcy this involves closing shop and liquidating a debtor assets. ** Case 11 Richard P. Friese Chapter 11 is a way for a person to reorganize their personal finances under to the watch of the courts. In most cases the debtor can operate business while going through the bankruptcy procedures; this called debtor-in-possession. In this case the court cannot confirm Mr.Friese plan of reorganization. Since none of the creditor has agreed...
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...bought and the loss generated from liquidating, L.L. Bean calculates a fractile for the items since the fractile calculation indicates what point is optimal to hold the stock in order to balance overstocking and understocking costs, which then determines the number of units to stock. 2. What item costs and revenues are relevant to the decision of how many units of that item to stock? The cost of the item for L.L. Bean and the price at which they can sell the item are the two factors that are relevant in determining how many units of an item should be stocked. L.L. Bean can, then, calculate the profit margin by subtracting item’s costs from the selling price. The profit margin relates to the cost of understocking. Thus, subtracting liquidation value from the original cost of the item gives the loss for failing to sell that item, which also means overstocking an item. Additional cost associated with overstocking is the annual holding time of their facility when they keep inventory for the next year. 3. What information should Scott Sklar has available to help him arrive at a demand forecast for a particular style of men’s shirts that is a new catalog item? Since Scott Sklar is unable to look at historical data for this particular item, he needs all the past data related to new items along with forecasted demand and the actual demand to discover any...
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