Weight: 20%

Marks: 15

Assignment #3: Fact Scenario – Business Organizations

Instructions

Review the materials from Module 8 and prepare responses to the questions about the fact scenario found below. Your answers must be typed. Submit your answers through the D2L Assignments area. Please check the submission date in the Course Schedule.

Facts

You are an avid amateur inventor and have stumbled across an idea that may revolutionize the renewable resource sector. You think you have discovered a way to build solar panels so that they can attract and retain energy at least 100 times more efficiently than is the current norm. However, as with any business venture, you realize that there is some risk involved. You have $50,000-worth of investments and share a mortgaged house with your spouse. You also own a one-quarter share of the family farm.

You have drawn up a business plan and estimate that you will need $1,000,000 in order to finance your business. During a class break, you mentioned your idea to a fellow classmate in BLAW – they love the idea and think you’re a genius. Your classmate has some truly excellent ideas on how to market the business, and says she has $100,000 that she would like to invest in the business venture. Your family also supports your business idea and has pledged to help you financially.

Questions

Question #1 (10 marks)

Define each of the four different business structures that you may use to set up your new business. Identify one advantage and one disadvantage for each structure in the context of the provided facts. Finally, choose a business structure for your new venture and fully explain why you chose the way you did.

Question #2 (10 marks)

Based upon the business organization that you chose, explain in detail how you will raise the funds to finance the business. In your explanation, please describe in detail what each party providing funds will receive and the responsibilities that lie with the receiver of the funds.

Question #3 (5 marks)

Based upon the business organization that you chose and its particular method of financing, what liability do you face personally? What liability would other investors face? Explain the extent of this liability.

Question #4 (25 marks)

Add the following details to the original facts: You have chosen to structure your venture as a corporation and are now deciding on the share structure you will use. You know that it is possible to change it later, but it is much simpler to structure it according to your needs from the beginning. Your dad, mum and four friends – Chris, Nima, Monica and Sanjiv – have all asked to buy shares in your corporation. However, they all have different amounts that they can invest and different levels of interest in participating in the corporation. You appreciate their loyalty but want to make sure that you maintain control of the corporation. You also realize that you may need more investors than just your close friends and family.

1. Describe the issues that you will need to consider when formulating your share structure. Consider how the shares will be sold as well as how many classes of shares you will create. What rights will attach to each class of shares? (5 marks)

1. If you only issued one class of shares, identify three rights that each shareholder will have. (3 marks)

1. The shareholders have elected you to be the sole director of the corporation, and you have appointed an officer to help you carry out your obligations. What are the two overriding duties owed by directors and officers of a corporation? Describe each of these duties. (4 marks)

1. Chris, one of your shareholders, has become very dissatisfied with the management of the corporation and its performance. What four options/remedies are available to him? Of these options, which is the most likely method of success for Chris? (5 marks)

1. Describe three ways in which your corporation can be terminated. (3 marks)

1. What are five ways a director can attract personal liability through statute? Describe the nature of the sanctions or penalties that he or she may face in each case. (5 marks)

The announcement in November 2017 that Volkswagen would commit 50 billion euros to launch the most comprehensive electrification initiative in the automotive sector was a crucial turning point. As Sustainability Council, we were thrilled to be part of this massive change. Then, with Herbert Diess taking the helm as Chief Executive Officer in April 2018, the transformation gained new momentum – suddenly a sense of urgency was very tangible. Under Mr. Diess’ leadership, Volkswagen started a massive change process, which has been essential for the company’s transformation.

The transformation is far from completed and the biggest risk now is that the change process slows down. For this reason, Mr. Diess’ drive and rigor are absolutely crucial to safeguard Volkswagen’s future. Volkswagen is on the right track. Now it is key to double the pace and ensure that all employees and stakeholders are proud to be participating in one of the greatest corporate transformations of all times.

Question 1 (Compulsory Question)

There is no guarantee that change will stick in the long run. With reference to the information in the case above, critically discuss the various steps that Volkswagen can take to improve the likelihood that change can be sustainable. Provide recommendations for future companies facing such change sustainability issues