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Introduction to Business Entity
There are many kind of business entity which has been established in Australia, Dealing With Business Activities. It is a very well known fact that there are many business organization in Australia whose main purpose is to carry out business and business related activities all over the region. Such will ensure a proper regulation of commercial activities for their consumer. In order to ensure a proper consumer satisfaction, it is very much essential that a work shall be carried out in a proper manner which is why government had made several kind of initiative like implementing certain rules and regulation which will make sure that the rights and duties of stakeholders shall get protected(and Yar, Jewkes, 2013). One of the major law dealing for business scenario is Corporation act 2001. it is a kind of law which shall be dealing with business entities in Australia at federal interest level. The following care shall focus on to the different provision of corporation act 2001. the main aim of the project is to create a better understanding and knowledge on this act.
Disclosure of provision of investment in Corporation Act 2001
There are many kind of business activities which has been taking place in region in order to carry out business environment in the market. There are many kind of organization which has been set to carry out different types of activities related to sell and buy of the affairs or articles. It has been seen that it is very important to establish a proper authority first then to start with establishment of a firm. That is when a new organization of business has been set up in the market then it is very important management shall be carried out in a proper manner. There are many laws and regulation which give a guideline to organization regarding setting up management for an example it has been seen that one of the most efficient act in terms of business activities is corporation Act 2001 of Australia(Womack, and Jones, 2010).
Feature Of a Business Entity
This act have several kinds provision which shall deal into basic feature of a business entity. For an example when a company is being established for the very first time, then it is very much essential to register such company in a authority so that a business organization shall be legally established. The act shall include what kind of employee is to be hired in a company like there shall an officer and director of the company who shall look for all the affair in an organization(Bakan,2012). There are several kinds of rights and duties of an employee and an office, such rights are described under corporation act 2001. it has all the terms and condition related to the business organization which can help a company to be legally strong. It is very important for a company to get recognized by law as there are many legal requirements and if such requirements shall not get fulfilled then liability will arise on the company regarding any kind of breach in a provision(Zehr, 2015). The act also discuss about the power which shall be granted to a person or a particular authority to deal with other members for an example there are several stake holders in a company and to deal with them, company need power and authority. Such powers are described under act. There are may kind of provision which has been covered under this act of which one of the important provision is disclosure provision regarding investors of a company. According to Corporation Act 2001, PART 6D 2 deals in the provision related to the disclosure of investors about securities. The word disclosure can be explained as an action which will disclose all the relevant information that is no important information whether it is related to any kid of contract or any kind of securities shall be kept as a unknown or secrete. Section 704 of Corporation act 2001 explains about when the disclosure of information to the investors shall be needed. It stated that when an offer of security is being made to investor then such offer has to be disclosed by the party under this part. There are certain advertising restriction which has been explained under section 734 of this act(Spamann, 2010). There are different kind of restriction to be applied on the document, depending upon what type of document is being lodged. There are different kinds of documents which need top be disclosed when an offer has been made to investor for an example document like Prospectus, short From Prospectus, Profile statement, offer information statement. Such types has been explained under section 709 of the act. Section 7069 of the act explains that any offer which has been made between the company and the investor related to issue shall be disclosed.
Sub section (1) of section 707
Sub section (1) of section 707 of the act explains that an offer which has been made between the parties regarding some sale shall be disclosed sub section 2 explains about the offer of body's control. It is absolutely correct to state that when a disclosure provision is being maintained between a investor and a company, it shall bring a balance between two. Whenever an agreement has been made between the company and a investor regarding any offer to sale of controlling body then it is key principle to disclose all the important documents related to it. As it shall enable a proper balance between the investor and the company(Avgouleas, Goodhart, and Schoenmaker, 2013). Whenever all the documents are being informed between the parties which are important from an agreement then it shall bring up a form of transparency. According to various laws it is very important to maintain a transparency between the parties so that there shall be no confusion remain.
When all the documents are being disclosed in front of investor that is when all the information shall be in a knowledge of investor then it shall bring a unit of transparency(Freeman, Wells, and Wyatt, 2014). It is very essential that all the information must be produced in a clear manner as it will lead various other consequences for an example it the information is being clear in the mind of a person or an investor then he will be able to quote an offer well. One of the major result regard with maintaining a disclosure provision that is disclosure of documents that there is least chance of rise in legal remedies. If an amount of transparency shall be maintained between the parties then there shall be least chance for any kind of liability arising out of breach of offer. It has been seen that while making an offer there are certain clause which are not clear to the mind of an investor which is why a offer is not able to form in a perfect manner. Such confusion in the making shall leads to beach and rise in liability against corporation act. If all relevant information is being clear then a proper balance shall be made between the company and an investor(Koh, Wong-Foy, and Matzger, 2010). It is an obvious fact that when all the things are being clear in a mind of investor with the application of disclosure clause then an adequate balance shall be maintained between both the parties. Another factor which will lead of maintaining balance between the parties in terms of disclosure of documents that an amount of accountability shall be maintained between the an investor an a company. That is the facts related to the offer made shall be accountable to investor first and then to company. Being investor, it is the prime concern of him to know ever bit detail about documents so that in future there shall be no misrepresentation by the party. When documents are not being disclosed between an investor and a company then it may possess to probability of misrepresentation(Chesbrough, 2010). A misrepresentation is considered as misleading of a party with the execution of any kind of false statement. If there shall be misrepresentation between a company and an investor regarding documents of offer, then it will lead to inadequacy and imbalance. If there shall be no proper balance maintained by a company against investor then no such investor will come forward to make an investment into a company.
Important Information Regarding Business Entity
When a procedure of disclose take place then there are certain requirement which needs to be fulfilled. Division 4 of Corporation act 2001 shall reflect about the requirement for disclosure of any document. section 710 of corporation act explains about the requirement about disclosure of any document(Alali, and Foote, 2012). It states that all the important information shall be maintained in the offer which is being made between the parties and such information shall be critically assessed on matter like to what extent the information is useful for inventors or if the person finds an information relevant. Section 711 of the cat explains about specific disclosure of the information. It states about the terms and condition which is being mentioned in a prospectus or the disclosure of any kind of interest with the involvement of certain people. There are many other specific information which is required to disclose in front of investors regarding an offer. Section 712 to section 716 of corporation act explains about the requirement which is being needed to disclose a document(Baumgartner, 2014). For an example, it states about simple corporate bonds, base prospectus, information statement etc. as it has been discussed above that it is very much important for a company which has been dealing with investors to disclose all the relevant information because if there shall be no disclosure of information then there are many other consequences which a company has to face. One of the major consequence is regarding legal liability. If there shall be no disclosure of any kind of document related to an offer then it may be probability of non-transparency between the parties. When the provision regarding any kind of transparency is breached then there shall be a probability of misrepresentation in an agreement. It is very much happened that a false statement has been presented in front of an investor regarding an offer which has lead towards breach and rise of legal liabilities. Section 726 to 736 of corporation act states about various kinds of liabilities which has been arising out of breach of an agreement(Ravasi, and Stigliani, 2012). Such legal liabilities shall always arise when there shall be breach of contract or there shall be inadequacy in information presented in front of investor. Another consequence regarding the same is no investor will be ready to invest in a company by which the success of an organization shall come to an end. Investors plays a very important role for a company as their work 8is to invest and make profits but if there shall be breach in terms of corporation act 2001 provision which will amount to legal liability, then no investor shall get ready to invest. The act also describes about the amount of penalty which shall be imposed on a company, breach the provision of discourse regarding an investor(Bédard, and Gendron, 2010).
Hence, it ca be said that it is very important for the company who is dealing with investors to disclose documents related to offer so that there shall be an amount of transparency maintained between the party and it will not amount to any kind of breach resulting into rise of legal liabilities(Queen's Printer for Ontario, 2012-17).
It shall be concluded from the above project that for the protection of different kind of rights and duties related to business entity in corporation act 2001. it has been further explained in the project that it is very important for for a company to disclose all the important documents related to offer so that a transparency shall be maintained. If there shall be no misrepresentation, there will be amount of balance maintained between the parties. The projects has described various sections of act describing about disclosure provision. The report has also described about the liability arising out of breach of offer by company and related consequences.
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- Baumgartner, R.J., 2014. Managing corporate sustainability and CSR: A conceptual framework combining values, strategies and instruments contributing to sustainable development. Corporate Social Responsibility and Environmental Management.
- Bédard, J. and Gendron, Y., 2010. Strengthening the financial reporting system: Can audit committees deliver?. International journal of auditing.
- Chesbrough, H., 2010. Business model innovation: opportunities and barriers. Long range planning.