Kate Manderly is a winemaker who is the sole director and shareholder of Cross Key Wines Pty Ltd. The company operates a vineyard in Gippsland with fifteen employees. The company has $800 000 in assets, wine-making equipment, and a twenty-year lease over the vineyard. Cross Key white wines have become very popular with the drinking public.

Kate recently expanded the offering to include red wines. In order to do this, Kate purchased a second vineyard in the Coonawarra region of South Australia. Ten experienced investors invested $500000 each in return for:

a)5% equity each;

b)guaranteed dividends until each investor’s stake is returned (after a period of 5 years). The investors then intend to remain as shareholders, although dividends will no longer be guaranteed; and

c)Security over the entire property and shares of the company under the Personal Property Securities Register (PPSR)

The prospectus contains the following words: “Funds raised will be principally utilized to purchase land in the Coonawarra region of South Australia, and winemaking equipment.”

Advise Kate what changes have to be made if the company converts from a proprietary company to a public company. Briefly discuss the advantages and disadvantages of each type of company.

Answer rating: 100% (QA)

Moving your company from a sole proprietorship to a company structure can seem to be a significant step but is really a straightforward process Changi... View the full answer