WHAT IS A COMPANY AND THE CONCEPTS ON THE CORPORATE VEIL PROBLEM SET 1 PAGE 580 Questions 1 and 2 Other tutorial questions: (1) A Pty. Ltd. has an issued capital of 100 $1.00 shares paid to 50 cents. B and C each hold 50 shares and are the directors of A Pty. Ltd. B borrows $50,000 from his bank on behalf of the company. Sometime later, the business activities of A Pty. Ltd. fail and it becomes apparent that the company cannot repay the loan to the bank. B is known to own substantial assets and the bank wishes to recover the amounts outstanding on the loan from B. a. Advise B as to his liability. b. What steps could the bank have taken in order to recover the full amount from B? (2) Review the case study from the lectures and ensure you understand and can answer the questions asked by the client. PRACTICE QUESTIONS: Question 1: Tan Lin Tze always wanted to run a food shop. He decided to buy a franchise. The one he liked the best was called Pie Shop. After carrying out his due diligence on Pie Shop he purchased one of the franchises. Tan Lin Tze is unsure of the structure that he should use to run the franchise. Required: Explain to Tan Lin Tze three benefits to him of having the business run via a company compared to other structures. If you agree a company is the best structure what type of company should you register for Tan Lin Tze and why? (5 marks) Question 2: Ricky Ponting is a well-known Australian cricketer and comes to you for advice. He has retired from cricket and is keen on golf. He wants to buy a vacant block of land that can be developed as a golf course in the future. As the land was on sale he signed the contract to buy the land on 26 January 2015. By signing on the 26 January 2015 it saved him $150,000. He has now been told by his financial adviser that the land should not be in his name. After discussing it with him you recommend that it be owned by a company. You incorporate and register the company on 31 January 2015. Ricky and his father are the only directors and shareholders of the company. The land is due to be settled by 15 February 2015. REQUIRED: What are the issues that you need to advise Ricky and his father of so that Ricky is not personally liable for the purchase of the land and the company is responsible.