Running Header: DREAMS INSPIRE LTD.

Dreams Inspire Ltd.

[Name of the Institute]

Dreams Inspire Ltd.

Exercise 2

The formation of a company as per the Company Act of 2006, clearly states that all of the founding members must have an adequate level of shares within the organization. The proposed company which will be formed through the joint partnership of Gary, Martina and Emma would be a very complex private organizational entity, as all three primary stake holders have different demands and point of views. The fashion and apparel oriented company, would essentially be funded primarily but the funds provided by Gary, and this is the reason why Gary wants to safeguard his financial interests. He wants to ensure that the company is focused on its primary functions, and that it is managed in an adequate fashion, so that the management does not stray from the core functions of the organization and the revenues can be achieved. Although the relevant experience and the industry knowledge capital, is basically possessed by the two ladies; Gary is more of a passive investor; whose primary interest is attaining a steady flow of financial returns.

Companies Act 2006

As per the Part 1 Section 4 (1) of the Companies Act of 2006, the companies that are formed by the certain primary members are considered a private entity. In this perspective the company Dreams Inspire Ltd. Is a private organization, formed by the joint partnership of Gary, Martina and Emma. In a public company the shares of the organization would be offered to the general public through the process of an IPO, however in this case the organizational entity is established by the investment of the mentioned partners. As per the appropriate section mentioned above, the company is a private organization (Wynn, 2007, pp. 192). Although the organization is a private entity, its initial investment is not equal, as all three stakeholders have different form s of investments.

Limited Liability

As mentioned in the Part 1 Section 3 (1) of the Companies Act of 2006, the private organization formed among the founding members of the company, have only a limited liability to the organization, if the company is formed on the basis of a Private limited organization. As the primary under of the Dreams Inspire Ltd., Gary can demand the rest of the investors, to form the company on the provisions described in the mentioned sections. This will allow Gary to have only a specific amount of liability in the operations of the company, and hence he would not face the risk of losing his private property in the case of organizational losses (Reisberg, 2009, pp. 18). Gary only has a limited interest in the business operations, and he will act as a passive and indirect stakeholder of the organization. As per the initial agreement between the three members of the company, the management related functions will be primarily handled by Martina and Emma. These two ladies have the relevant experience I the industry, and it is their talent and skill which would enable the ...