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Isaac Decided to Form a Company to Run His Business

Question 10

Multiple Choice

Isaac decided to form a company to run his business selling physics books. Isaac knows very little about corporate law matters. He went to ASIC to incorporate his company (which he wanted to call Gravity Books Pty Ltd) with him as the sole shareholder and the sole director. Unfortunately, the attendant at the ASIC office told him that the name Gravity Books Pty Ltd was already taken and he would have to come up with another name. He said he would need to think about a new name and left. For the next week Isaac thought long and hard about a new name but in the meantime entered into a number of contracts for the purchase and sale of books in the name Gravity Books Pty Ltd. While sitting under an apple tree, Isaac had an epiphany about the new name. He went back to the ASIC office and registered the company with the name Gravitation Books Pty Ltd. Which of the following is correct:


A) ASIC should have registered the company in the first instance because it is perfectly acceptable for more than one company to have the same name.
B) ASIC should have never registered the company because a proprietary company needs at least 3 directors.
C) The contracts that Isaac entered into in the name of Gravity Books Pty Ltd are most likely enforceable by and against Gravitation Books Pty Ltd provided Gravitation Books Pty Ltd ratifies the contracts.
D) It is unlikely that Isaac would be deemed a promoter of Gravitation Books Pty Ltd because at no point in time did he consent to being a promoter as required by section 175 of the Corporations Act 2001 (Cth) .
E) Both (c) and (d) are correct.

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