In your opinion, discuss why Xiaojing : 1) deci ded to dissolve the partnership 2) consider ed forming a company i nstead of establishing another partnership, or setting up a sole proprietorship 3) may prefer to list the company on the Australian Stock Exchange instead of remaining as a proprietary limited company Note: Three (3) reasons are required for each of the above Parts 1, 2, 3. Word limit: 600

Assignment 1

Name:

Instructor:

Institution:

Date:

    Part 1: reasons for dissolution of the partnership

Partnership dissolution is defined to as the procedure during which partnership affairs comes to an end. Xiaojing decided to dissolve the partnership following the continuous disagreement between the business partners. When the disagreement between partners emerges with such disagreements considered to be material in that it significantly slows down the pace within which decisions are to be made, it is highly recommended that such a firm should be dissolved to avoid landing the business into bigger troubles. Thus this was a reason why the Xiaojing decided to dissolve. Another reason that I believe to the dissolution of the business is that the business had significantly realized its objectives and thus given the time remaining to the expiry of the contract plus the continuous disagreement that manifests between the partners it was deemed appropriate to dissolve it save the business from possible frustrations that were forecasted. Also, it can be the reason that the dissolution decision was to conclude given the fact that some partners had unlimited liability and thus this exposed them to great risk suppose the business was declared bankrupt. The unlimited liability clause would mean that if the business runs into a financial crisis, the liability of such partners would be the extent of their personal assets.

Part B: Considered Forming A Company Instead Of Another Partnership Or Sole Proprietorship

The decision for the formation of the company by Xiaoping rather than another partnership business or a sole proprietorship could have been influenced by a number of reasons. Some of this reason could; to reduce the level of disagreement. It should be noted that some of the main reasons that led to the partnership dissolution was continuous disagreement between the partnership. The formation of a partnership would ensure a participative mode of decision making, and disagreements is anticipated to be less. Also, suppose the formed company is a limited company, it will mean that the liability of the shareholders who were initially partners would be limited to investment to the company and not there personal properties/assets. Also, the formation of a company instead of another partnership or a sole proprietorship could have been influenced by the fact that, company unlike the two types of business structures have the capacity to raise a huge capital base both from internal and external sources. This is important in promoting business growth through improving investment levels through sound financial sources and management.

Part C: Listing  the company on the Australian Stock Exchange rather than remaining as a proprietary limited company

Companies whose shares are listed in the stock exchange stand to derive significant benefits. Some of the reason that could have motivated Xiaoping to decide listing its shares on the Australian Stock Exchange rather than trading as a proprietary limited firm could be to enjoy the many benefits that firm enjoys while trading in the stock exchange. Some of these reasons could be to increase the company’s capital accessibility. Although the proprietary limited company has a wide capital base, it does not surpass the level that firms trading in stock exchange enjoy thus this could be the reason. Also, the company may have decided o be listed on the Australian Stock Exchange to foster their profile considering they were new and thus such listing would attract potential investors trading in the stock exchange market. The company may decide to take this route to increase their business value. In most case firms listed in stock exchange enjoys greater market value than those not listed which is very critical in appealing to investors.