Problem-based, case study question. Word range: 800-1,000 words. Helios Pty Ltd, a floristry company engaged in genetically modifying floral species, has recently encountered cash-flow problems. It is a small proprietary company with 25 employees and 5 directors. The directors are also employed by the company as the scientists who work on new flower breeds. Up until recently the business has been quite profitable, with several permutations of flower being generated each year resulting in more than enough funds from the sale of the associated intellectual property rights. Whilst the directors do not want to see the company go under, as this will also result in them being out of work, they have noticed that unless they can secure some finance over the next few months they may be unable to pay their fixed costs, including rent on the companys primary research facility and expensive equipment. Henry, considered by all to be the leading director of the company, approaches you for legal advice regarding what the company can do to generate funds. Being a scientist by profession, he does not want to waste his time or expertise on corporate affairs. He has already asked the companys bank for a roll-over facility to be attached to its running account and the bank has declined. The bank has also warned Henry that if the company does in fact run out of funds, he may be personally liable for the companys debts. Henrys first and foremost concern is his own financial well-being and he does not want to have to pay the companys debts out of his own pockets. The company is his pride and joy, having founded the entity more than 10 years ago, and he has no intention of shutting down his research if he can obtain some short-term funds. Advise Henry of his business prospects as well as the associated insolvency risks.

Additional announcement A study of Corporations Law is not just confined to the sections of the Corporations Act 2001. You must illustrate the sections with relevant case law. A recitation of the law and the decisions of the cases is insufficient. You must apply the law to the facts of this question picking up the details the examiner has laid out in the question. For example, if you are to advise Henry to convert his company into a public company so as to benefit from being able to raise funds from the public, you must also weigh in onto the disadvantages as the company appears to be a closely-held company. The ability to explore the issues and apply the law is what distinguishes a student who is just able to barely pass and one who is of high distinction material. So strictly, the IRAC format may not be suitable for you to use. Instead, you may want to use headings to highlight a particular area you want to advise Henry for example Separate Legal Entity. I would remind you that you are required to advise him so state the law for example for separate legal entity outlining where applicable sections of the Corporations Act, 2001, and case law and also apply to his case and tell him how it would affect him and the company. Remember to state the law and show how it applies to him and his company. That would constitute your advising Henry.