Corporations Law in Australia Essay Example | Topics and Well Written Essays - 1250 words

Corporations Law in Australia - Essay Example A limited liability company, also called a limited liability corporation, usually functions on a smaller scale than a limited liability partnership (Wikipedia 2008), hence, it's method of management and, therefore, it's level of limited liability, though in many aspects the same, does differ from that of a partnership. A company is generally run by the managers, who are responsible for the general functioning of the corporation. Hence, although they are protected by limited liability in that they are just responsible for their investments, they do have to manage any monetary issues that may be faced by the corporation which are beyond the fiscal capacity of the corporation (Wikipedia 2008). The tax liability level might also differ (Wikipedia 2008). On the other hand, a partnership functions on a larger scale, hence, it's method of management and operation differs, giving it different protection under the liability. A partnership is directly run by its investors (Wikipedia 2008), who are all protected by the liability clause, and generally are not responsible for monetary issues beyond their investment. Whereas they are subject to tax payment, the partnership itself, in some cases, maybe tax transparent (Wikipedia 2008), that is, exempted from paying taxes. Hence, the liability of the partners is decreased. Q3: In the context of corporate law, there have been, and still are, many incidents where the law has to be defined and determined in order to solve court cases. In the process, many a time an established act of law is challenged, clauses are redefined and established, or new stipulates are formed. A case in point is the Salomon v Salomon & Co. [1897] A.C. 22 (H.L.). Following is a discussion of the case, and the act that was formed as result of this case. Aron Salomon, a leather merchant, formed a company after establishing a successful business of leather goods (Wikipedia 2008). His decision was supported by his family who formed the shareholders in his company, a total of seven shareholders as per the corporate law of the time. Aron Salomon remained the company's principal shareholder and its principal creditor, and was the managing director of the company (Wikipedia 2008). He established Salomon & Co. Ltd., a limited liability company that was under the protection of the limited liability clause of the corporate law. He held the majority of the shares, and the whole company was practically a family business. However, it went into liquidation (Wikipedia 2008). The liquidator filed a case against Mr. Salomon and the company, and the judge seconded the appeal on the grounds that Mr. Salomon had established the company merely to transfer his business into the corporation in order to obtain limited liabilit