Evan Eagles has been working in partnership Ken Kite; both men are I.T. specialists. They believe that they have an innovative business idea which they are keen to pursue but which both recognize
has a moderate level of risk of failure. The men are in their 30s with pre-school children; neither of their wives is working at the moment; and both have large mortgages on their houses.
Evan and Ken will need to raise $20,000.00 in capital, which they intend trying to raise from their bank, to buy specialized equipment to start this new business. They believe that the best
structure for this business would be a company.
Duncan Drummond is an old university friend of Evan and Ken and he is interested in helping out Evan and Ken with their business endeavour. He has $2,500.00 he would be prepared to invest in the
business. He does not want to be involved in the management or governance of the business (although he might want to in the future) or to work in the business in any way (as he knows very little
about I.T.). He simply wants to invest his funds in the business and, hopefully, get his money back one day and a share of the profit if the business does well.

Question
In your presentation, explain the advantages and disadvantages of using the company structure for the planned business.

provide two or three brief points about how Duncan’s investment in the company might be structured. think about (a) whether or not Duncan should be a director; (b) how his investment would be
given effect (eg, would his investment be as a shareholder or a lender?) and (c) whether his investment should be conditional on any special rights or requirements (eg, once the funds are invested
in the company, should there be any restrictions on how those funds are used?).