Small Businesses - Is there a need for a new legal structure?
Much has been written in recent years about the importance of the small business to the economic well-being of a country and problems associated with existing legal structures. It has frequently been suggested that a new form of organisation would be appropriate and such reform has occurred in some jurisdictions, e.g. South Africa. In England in 1981, the government published its Green Paper "A New Form of Incorporation for Small Firms"' with an Annex by Professor L. C. B. Cower. These proposals were well received in some quarter, but it is still uncertain whether the reforms will materialise. In Australia in 1984, the Companies and Securities Law Review Committee published its Discussion Paper Number 1 entitled "Forms of Legal Organisation for Small Business Enterprises" and invited responses to the issues raised in the paper. The Committee's views and recommendations were published in September 1985 in their "Report to the Ministerial Council on Forms of Legal Organisation for Small Business Enterprises". The major recommendation of the Committee was the introduction of a close corporation and the abolition of the exempt proprietary company. In New Zealand in 1973, the Macarthur Committee considered the Kommandit type of company (known to German and French law) but concluded that the present form of private company is well suited to the small family business. The main object of this article is to consider in the light of overseas experience whether that view is still valid.