Business Associations Tutorial 1 Week 2
Online Quiz
Question 2: Melissa and Annette want to set up a business “Melann Hair & Beauty”. Is the name
available?
Proposed company name
BUSINESS NAMES REGISTRATION ACT 2011 (NO. 126, 2011) - SECT 25
Is a business name available to an entity?
A business name is available to an entity if:
(a) the name is not identical or nearly identical to:
(i) a business name registered to another entity; or
(ii) a name that is reserved or registered under the Corporations Act 2001 for another body;
(iii) a name that is registered to another entity on a notified State/Territory register; or
(iv) if ASIC receives notice electronically from a referring/adopting State or an affected
Territory of the name of a government body and the entity is not that body--that name; or
(v) if ASIC receives notice electronically from a referring/adopting State or an affected
Territory that an Act of the State or Territory, or an instrument made under such an Act,
specifies a name as the name of another entity--that name; or
(vi) if ASIC receives notice electronically from a Commonwealth government body of the
name of that body and the entity is not that body--that name; or
(vii) if ASIC receives notice electronically from a body that an Act of the Commonwealth, or
an instrument made under such an Act, specifies a name as the name of that body and the
entity is not that body--that name; and
(b) a name that is identical or nearly identical is not held under section 54 or a provision of the
Transitional Act; and
(c) no other entity has priority over a name that is identical or nearly identical; and
(d) either:
(i) the name is not of a kind that is undesirable; or
(ii) the name is of a kind that is undesirable but the Minister has determined under
subsection 27(2) that the name is available to the entity; and
(e) either:
(i) the name is not constituted by, and does not include, a restricted word or expression; or
(ii) the name is constituted by or includes a word or expression that is restricted unless a
condition is satisfied, and the entity satisfies the condition.
Question 3: Why is Salomon’s case considered an important case in leading to the growth of small
proprietary companies?
Small proprietary companies – The implications of the case mean that the corporations act now
allows for the formation of public or proprietary companies with a single shareholder: s 114. And
enabled the owner to limit their liability where a sole trader would not be able to.
Saloman v Saloman
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S had a leather business that he operated together with his 4 sons.
Under the Companies Act (Eng) he incorporated the business as A S Co Ltd, a private company. S was the
only substantial shareholder. He and his 2 sons were directors.
 S entered into an agreement (deed) with the company to sell his business to the company for 39,000
pounds and to apply the money towards: debentures secured by a mortgage (10,000 pounds); purchase of
share capital (20,000 pounds) ; repayment of business debts and cash.
 After some time the company became insolvent. Upon a sale of the assets, the sum realised was less than
the amount of the mortgage held by S and the unsecured creditors received nothing. The liquidator
brought an action to set aside the transaction. It was claimed that the company was formed in fraud of the
unsecured creditors that it was a mere agent of S.
Held
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Providing the formalities of incorporation were observed it was not contrary to the Companies Act for a
trader to gain limited liability and obtain priority as a debenture-holder over other creditors
A separate entity is formed under incorporation even if all the shares are owned by one person
Lord Macnaghten:
“The company is at law a different person altogether from the subscribers to the memorandum, and,
though it may be that after incorporation the business is precisely the same as it was before, and the same
persons are managers, and the same hands receive the profits, the company is not in law the agent of the
subscribers or trustee for them”
The corporate veil refers to a company being a separate legal entity from members and directors. In
Saloman v Saloman Lord MacNaughten held that a company is a different person from the
subscribers, even where incorporation occurs from earlier business, and it is substantially the same,
the company is not at law, an agent of the original party.
This is reflected in s124(1) CA which gives a company all the legal capacity and powers of a legal
person plus all the powers of the body corporate.
Question 4
Refer to lecture slides