COMPANY LAW

Company Law-Trim Pty Ltd.

Introduction1

Legal Advice to the Parties1

Trim Pty Ltd: The Company1

Issue1

Relevant Laws1

Application of Laws2

Conclusion2

John, Peter and Sheila: The Directors2

Issue2

Relevant Laws3

Application of Laws3

Conclusion3

Mary and Gwen: The Shareholders4

Issue4

Relevant Laws4

Application of Laws4

Conclusion4

Fancy Equipment Pty Ltd: The Creditor5

Issue5

Relevant Laws5

Application of Laws5

Conclusion5

Conclusion6

References7

Company Law-Trim Pty Ltd.

Introduction

Trim Pty Ltd, a company that dealt in the garden landscaping was started by three friends namely John, Peter and Sheila. The owners turned out to be the directors of the company. Mary and Gwen, the spouses of the two directors became the shareholders of the company by buying the shares. The primary creditor of the company is Fancy Equipment with which the company entered in a contract to purchase expensive state of the art landscaping equipment which was prohibited by the constitution of the company. The company ultimately became insolvent because of traumatized financial conditions. The creditor Fancy Equipment applied for the winding up of the company to the court.

The purpose of this paper is to advice four parties on their legal position. The four parties included Trim Pty Ltd: the company, John, Peter and Sheila: the directors, Mary and Gwen: the shareholders and Fancy Equipment Pty Ltd: the creditor. The paper briefly describes the issue pertinent to each of these four parties. The discussion then subsequently entails the relevant laws and the application of the laws to the situation at hand. Eventually, the discussion concludes by the legal advice for each of the four parties.

Legal Advice to the Parties

Trim Pty Ltd: The Company

Issue

The company Trim Pty Ltd: the Company was started by three friends. The company was pertinent to the field of garden landscaping which has got a good and competitive market. The company had the potential of gaining profits and growth because of the strong market for garden landscaping. Due to the inappropriate care and acts of the directors, the company Trim eventually landed up in a position where the financial standing of the company was completely shattered, and the company was not even in the position to pay the debts to its creditors especially Fancy Equipment. The company is finally in the situation where court has ordered for the liquidation of the company.

Relevant Laws

The Corporations Act 2001 of Australia clearly defines the process of liquidation or winding up of the company (Government of Australia, 2013, p.n.d.). Section 459A states that who may apply for winding up or liquidating a company to the court. Part 5.4A, section 461 of the Act describes the grounds or rationales on which the court can ultimately provide or pass the orders for winding up the company (Government of Australia, 2013, p.n.d.). Section 472 of the Corporations Act 2001 pertains to the right of the court to appoint the liquidator for the company who would look officially the process before and during the liquidation of the company, which is ordered for winding up, and liquidation by the court (ASIC, 2013, p.n.d.).

Application of Laws

As implied by the section 459A of the Corporations Act 2001 (Government of Australia, 2013, ...