Analyse the corporate law issues arising from the situation

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Question 1.

Andy has run a small corner store as a sole trader for many years.However, his adult children pester him to set up a company so that they can share in the prosperity of the business as shareholders. Andy complies and sells the business newly created company with 2 classes of shares: A class shares that have voting rights and B class shares that have no voting rights buy may receive dividends.Andy holds the sole A class share, whilst his children and spouse hold the B class shares between themselves.The company's purchase of the business from Andy was financed by a loan provided by Andy secured by a charge over all the company's assets. Unfortunately, the economic slowdown puts pressure on the business and the new company is unable to service the loan to And.Andy takes possession the company's assets as secured creditor leaving the business creditors with nothing.

Analyse the corporate law issues arising from the situation.

Question 2

Leo and Melanie decided to incorporate a company, to be called halcyon Daze Pty Ltd, to carry on their new business as Internet service providers. Immediately the decision was made, Leo signed a lease of premises for the new business in his own name.The company was register and the business was conducted from the new premises.

Discuss the actions of Leo in relation to the new company. Does the new company have to pay the lease and if so what would be the procedure?

Reference no: EM13487130

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