Business Law - very detailed LPC notes - excludes tax and accounting (which requires workbook)
I acquired a distinction (80%) using these notes - BLP carries a lot of weight for your overall grade; these notes will be a real aid. i attended every SGS.
WHAT IS COVERED (note this excludes tax a...
Name must end with: Must end with Limited (or Ltd) Must end with Public Limited company
s.59(1)) (PLC) (s.58(1))
One - (s.7(1) and 8(1)) One - (s.7(1) and 8(1))
Minimum number of
shareholders:
One (s.154(1)) Two (s.154(2))
Minimum number of directors:
No (s.270(1))
Is a company secretary Yes (s.271)) - A public company secretary
required? must have the requisite knowledge and
experience s.273(2)
Certificate of Incorporation
Certificates required before (s15(4); Business can commence Certificate of Incorporation (s.15(4));
commencement of trading: as soon as it is incorporated
Business cannot commence until a trading
certificate is issued by a Registrar showing
that the company’s allotted shared capital is
not less than the minimum (s.761(1)(2))
Must have at least one
Minimum share capital to be share (s.8(1)(b)) Minimum of £50,000 (or the euro
issued equivalent) (s.763(1)(a)(b)
Prohibited (s.755(1)) Permitted (but Financial services (FSMA
Can it offer shares to the imposes restrictions)
public?
The main advantage public companies have
is their ability to tap the financial markets by
selling equity (or debt) to raise capital.
No restriction on method of
Method of payment and payment (s.582(1)) Payments in cash only or where
minimum amount payable for consideration has been independently
share capital Shares can be issued without valued (s.593(1))
immediate payment
25% of nominal value must be paid on
allotment plus the whole of any premium
(s.586(1))
Other Can use written resolutions Cannot use written resolutions
Restrictions on loan to directors is Restrictions on loan to directors are stricter
less strict (money directors
borrow from company) Prohibited from company providing ‘financial
assistance’ for the purchase of their own
Not prohibited from company shares (s.678(1))
, providing ‘financial assistance’ for
the purchase of their own shares Cannot purchase its own shares out of
under CA 2006 – (s.678(1)) capital
Can purchase its own shares out
of capital.
SGS 1 – SETTING UP A BUSINESS
PRIVATE VS PRIVATE
BUSINESS MEDIA
, BUSINESS MEDIA
Always consider:
o What the main elements of risk in the current proposed course of action are
o What the consequences if things do go wrong (i.e. the potential liabilities) are
o What strategies can be employed to reduce or minimise these risks and potential liabilities.
Definitions:
Incorporated businesses are separate legal entities. Examples include private limited company,
public limited company, limited liability partnership.
Unincorporated businesses are usually treated as being the same as the owner. Examples
include sole trader, partnerships.
SOLE TRADER
- A person who runs their own business as a self-employed person
- It can be one person who owns and runs the business but employs others
- The business has no legal entity of its own; it is unincorporated
- The sole trader is personally liable for all the debts of his business
PARTNERSHIP
- Two or more people owning and running a business together as partners
- Governed by the Partnership Act 1890
- Tax Transparent - Partnership is not itself liable to tax; Partners are taxable on their share of any
profits.
- The partnership has no separate legal status.
- Partners have unlimited liability, joint and several.
LIMITED LIABILITY PARTNERSHIP ('LLP') –
- Governed by Limited Liability Partnership Act 2000 and 2001 Regulations.
- Halfway point between a traditional partnership and a private limited company
- Flexibility of a partnership with the added advantage of limited liability for its members.
- For tax purposes, it is treated as a partnership thus tax transparent - s.118 ZA ICTA.
- LLP is a body corporate and is treated as a separate legal entity from its members > may own
property, enter into contracts, sue and be sued in its own name; partners of the LLP will not be held
personally liable for any business debts incurred by the LLP (s.74 Insolvency Act).
COMPANY LIMITED BY SHARES (An artificial legal person)
- Formed by completing formalities under the Companies Act 2006
- Limited liability for its owners ((s.3(1) CA))
- Company has a separate legal personality
- Directors run the company on a daily basis.
- The shareholders, who own the company, usually only get involved in the most important decisions.
, SOLE TRADER COMPANY LIMITED PARTNERSHIP LIMITED LIABILITY
BY SHARES PARTNERSHIP
Governing No Statute Companies Act Partnership Act Limited Liability
statute 2006 (CA 2006) 1980 Partnership Act 2000
(LLPA) and a series of
LLP Regulations
Unlimited Shareholders Partners have
Liability of personal liability is limited to unlimited personal The liability of the
investors liability the amount, if any, liability on either a members of an LLP to
is unpaid on their joint, or a joint and third parties is limited to
shares (s.3(2)) several, basis the amount that they
determined by the have agreed to pay
nature of the under the terms of their
liability. partnership agreement.
Not a Not a separate Separate legal entity -
Legal status separate Separate legal legal entity – each the LLP may therefore
of the legal entity – entity from that of partner is own property, enter into
business Sole trader its owners -The individually contracts, sue and be
medium is company may own responsible sued in its own name.
individually property, enter into
responsible contracts, sue and
be sued in its own
name.
Min/max one Minimum one- Minimum of two Minimum of two
Number of person (s.7(1))
persons
needed to
set up the
business
None necessary; Incorporation document
Expenses No Higher setup costs although highly required
before or due formalities; in dealing with recommended to
on start-up no expenses company’s have a partnership Registration Fee
necessary constitutional agreement drawn
documents. up by lawyers Recommended LLP
(expensive) agreement drawn up
Incorporation
documents required Generally, the Act Printing of LLP
include: aims for equality stationary
memorandum and between partners
articles of (create a
association partnership
(recommended agreement to
lawyer involvement) override elements
of the Act)
Registration Fees
, Publicity and No No Privacy (similar
disclosure disclosure Disclosure to the No disclosure disclosures to
required registrar of: required (private) companies)
(private)
Registered office Registered office -
(s.86 CA) s.2(2)(c) and (d) LLPA
and 2009 Regs
Accounts (s.441
CA) Details of members -
s.2(2)(e) LLPA. As a
Need to keep a result of the Small
PSC register Business Enterprise
disclosing all and Employment Act
persons of 2015 (‘SBEEA 2015’)
significant control LLPs can for a fee keep
registers of members,
SBEEA 2015 directors, secretaries
(streamlined and charges at
procedure) for a Companies House.
fee, companies can
keep registers of Identity and details of
directors, members ‘designated members’
and secretaries at s.2(2)(f) LLPA(LLPs
Companies House equivalent of directors)
Disclosure of Need to keep a PSC
certain invoices and register disclosing all
payment practices persons of significant
control
Certain resolutions
of the members Accounts must be
e.g. s.29 and 30 prepared by
CA 2006 need to accountants annually
be filed at (Partnerships
Companies (Accounts) Regulations
Registry 2008)
Information on the Disclosure of certain
share capital of a invoices and payment
company. As a practices
result of the SBEEA
2015 the Statement Persons with Significant
of Capital can be Control (PSC) as of 30
updated as part of June 2016 pursuant to
the Confirmation the SBEEA 2015 LLPs
Statement need to keep a ‘PSC
(explained in point Register’. The PSC
7 below) to show Register must be filed
the aggregate with Companies House.
amount unpaid on The PSC Register must
the total number of be updated to reflect a
shares instead of change in PSC
the previous information within 14
requirement to days and Companies
show the amount House must be notified
paid up and unpaid of that change within 14
on each share. days of the PSC
Companies will only Register being updated.
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