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Summary Business Law and Practice
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Summary notes from Business Law and Practice course
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Corporate bodiesPartnerships Limited Limited Liability Private Limited
Partnerships Partnerships Company
Owners (Who Partners At least 1 Members Shareholder
and how At least 2 general P at At least 2 At least 1
many?) least 1 limited P
s4(2) LPA
1907
Managers (Who Partners General Partner Members Directors
and how At least 2 only At least 2 At least 1
many?)
Decision- Simple majority – Subject to LLP Directors: day-to-day
making unless 1. change Agreement – business, BR =
nature of business same as P’ship LLP majority;
2. change terms Regs: default SHs- fundamental
of Partnership position /constitutional = OR
3. Intro of new P by majority; SR by
which must be 75%/more
unanimous
Liability (Who Joint & Several – Not SLP – LLP liable as Company liable as
and for how unlimited liability General P separate legal SLP.
much?) s9 PA 1890 unlimited personality s1 SH liability limited to
liability; Limited LLPA 2000. value unpaid on
P up to value of Members liable – shares – must pay
contribution Wrongful Trading unpaid amount of
unless become – may have to issue price of shares.
involved/ contribute if WT. Ds not generally liable
participate in but could be IF
management WT/breach of duty/
of business given personal
s4(2) LPA guarantee.
1907
Ownership of Owned by LLP = owner as Company as separate
property and Partners not by separate legal legal personality
other assets P’ship = not personality
separate legal
personality
Constitution None. None/ Articles and
(what is it?) P’ship agreement LLP Agreement & memorandum.
governs or PA LLPA & LLP Memorandum more
applies – cannot Regulations imply relevant to pre-CA
override some terms. 2006 incorporated
sections – imply companies.
terms
Accounts (Are Produce accounts Produce Produce accounts Produce accounts –
they produced, – not audited – accounts – do – audited some audited – published
audited, and not published. not have to be exemptions –
published?) audited/ published
published
Publicity of None – no None – no Yes – Constitution CoHo records –
information requirement requirement LLP agreement – incorporation
not published at Constitutional
CoHo. Members documents publicly
info & accounts – available –
at CoHo – but memorandum &
keep info private articles. But SHs can
under LLP put sensitive info in
agreement SH agreement – not
filed at CoHo.
Security (What FIXED only over FIXED & FIXED & FLOATING
types can be P’ship assets. FLOATING over over company’s assets
,granted?) Bank may ask for LLP assets. SHs/Ds may need to
personal Personal give PG/fixed charge
guarantee & fixed guarantee may be over own assets if
charge over ought may be new company.
personal assets sought over
member’s assets
Incorporation None. Not “Incorporation Form IN01 & fee;
formalities Unincorporated incorporated document” LLIN01 statement of
business medium but LP must be form at CoHo & compliance;
Formed as soon as registered on statement of memorandum &
s1 PA 1890 Register of LPs compliance s1 amended articles s9
definition met – if not LLPA 2000 CA 2006
becomes
general Pship
Name must
include LP
Duties imposed Implied under PA LLP Agreement & Statutory duties –
on managers – not to make Fiduciary duties s170 – 177 CA 2006
by law secret profit s28 – Statutory duties Owed to co. itself
30 PA 1890. eg insolvency & s182 CA 2006
Fiduciary duties: accounts – LLPA Insolvency Act 1986
utmost good faith, 2000 Articles/Service
P’ship Ag. Contracts
Termination P’ship Ag. may say By CoHo Apply to CoHo for
notice, Exit of P application for striking off – not
does not end striking off carried activity for 3
P’ship, fixed term (various months/voluntary/
– state when end. requirements) compulsory/
If silent on Voluntary – liquidation.
duration – P’ship members sign
at will ends by
notice to other Ps
s26, s32(c) PA
Subject to P’ship
ag. ends on:
bankruptcy, death
or illegality
Restriction on Subject to No restrictions None – subject to Shareholders unable
withdrawal of Partnership for general Ps LLP agreement. to withdraw their
capital Agreement – if no unless LP Clawback capital contribution –
agreement only agreement. provisions apply but can take dividend
way to withdraw is Limited Ps on insolvency – payments from profits
by bringing about cannot transaction at if co. is doing well.
a dissolution. withdraw undervalue
during lift of LP
if do = liable for
amount
withdrawn
s4(3) LPA
1907
Companies
Private co Public co
Name must end Limited or Ltd Public Limited or PLC
with s59(1) CA 2006 s58(1) CA 2006
Minimum 1 1
number of SHs s7(1) and s8(1) CA 2006 s7(1) and s8(1) CA 2006
Liability MA3(1): limited by constitution MA3(1): limited by constitution
MA17: Constitution includes MAs – MA2 MA17: Constitution includes MAs – MA2
applies – limited co. applies – limited co.
, Company No Yes
secretary s270(1) CA 2006 s271 CA 2006
required
Certificates Certificate of incorporation Certificate of incorporation
required before s15(4) CA 2006 s15(4) CA 2006
commencing Can commence as soon as incorporated Cannot commence until a trading
trading certificate is issued by Registrar
showing company’s allotted share
capital is not less than minimum
s761(1) and (2) CA 2006
Minimum share At least one share Minimum of £50,000
capital s8(1)(b) CA 2006 s763(1)(a) and (b) CA 2006
CA allows offer Prohibited Permitted
share to public s755(1) CA 2006 (but not FSMA)
Method of No restriction on payment method Payment in cash only
payment and s582(1) and (2) CA 2006 s593(1) CA 2006
minimum Shares can be issued without immediate 25% of nominal value must be paid on
amount payable payment allotment plus whole of any premium
for share s586(1) CA 2006
capital
Differences between private & public companies
Legal Practical
CA 2006 applies to both but differences of detail Private company can be owned by a single
shareholder and managed by a single director.
s755 CA 2006 private companies cannot offer Shareholder and director can be the same person
shares. in a private company.
Public companies must have 2 directors but Often more shareholders of public companies
private only needs 1. s154 CA 2006 although it can only have shareholder.
Private companies less regulated as do not raise
money from the public at large.
Separate legal personality
Salomon v Salomon
Company is recognised by law as a ‘legal person’ with own rights and obligations
Legal entity separate from owners (SH) and those who run it on a day-to-day basis (D)
This is the case even where owned and run by the same person
Sole trader forms company – Mr Salomon majority SH – family buy shares – becomes
insolvent.
Mr Salomon main person liable – benefits from company – ‘one-man company’ argument =
unsuccessful.
Incorporated company = benefit from limited liability.
Exception to make person liable: court make individual liable – set up company when
incorporated was sham/fraudulent company – dishonestly to avoid/evade existing debts,
liabilities etc. – corporate veil.
Ownership of property Belongs to Co. not its members, eg stock belongs to the Co., an
insurance policy taken out in Co name not one of the members’ names
- Will not be valid if taken out in the members’ names
Macura v Northern Assurance Co Ltd
Contracts In Co’s own name – incurs contractual rights and obligations
Borrowing Co can borrow money and give security over its assets
Liability for debts Creditors owed money take action against the Co, not against SH
- Only outstanding amount on shares = extent of liability for SH
Side-stepping separate legal personality
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