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Types of trade
| Question | Answer |
|---|---|
| sole traders | not legally distinct |
| sole trader adv | no formal procedures independence and self accountability personal supervision All profits belongs to ST |
| sole trader dis adv | loss of personal wealth limited expansion high dependence on the individual No succession limited skillset |
| ordinary partnership | the relation which subsists between persons carrying on a business in common with a view to profit’ |
| types of partnership | • Informal – no written agreement • Formal – written partnership agreement |
| what act sets act key provisions | Partnership Act 1890 - contains fiduciary duties |
| what can written partnership's do | override the act provisions |
| Partners liability and authority | jointly and severable liable - Authority actual or implied and apparent follows agency rules New partners only liable for debts after they have joined |
| Partnership dissolved: | Death or bankruptcy, Subsequent illegality Expiry, Notice, Completion, Order of the court |
| Limited liability partnerships | • Limited Liability Partnerships Act 2000 • Incorporated partnership, separate legal personality • Subject to regulation similar to a company |
| Formation of an LLP | • Registration with the Registrar of Companies • Incorporation document: • Name • Location of registered office • Address • Name and address of all members • Two designated members for signing notices |
| LLP admin | Not required but usually have a formal agreement |
| LLP regulation | In absence of agreement act applies - limited liability partnerships regulations 2001 |
| LLP act rules | • No maximum number of members • Admittance by agreement of existing members • Cease by reasonable notice • Obligations for accounting records, annual accounts, audit as for a company |
| LLP member liability | • Separate legal entity • LLP liable for debts and obligations, not members • Wrongful and fraudulent trading, disqualification as a director • Each member is an agent of the LLP |
| LLP termination | • Dissolved or terminated by unanimous agreement • Members can propose voluntary arrangement administration, voluntary or compulsory liquidation |
| LLP insolvency exceptions | • Member withdrawals within 2 years before winding up can be clawed back if it can be shown they knew the LLP would become insolvent • On winding up, past and present members may need to contribute to assets of LLP dependent on LLP agreement |
| How is company registered | under companies act 2006 or any earlier act |
| company characteristics | • Legal personality • Liability • Veil of incorporation |
| legal personality | company is a distinct legal personality separate from its members -perpetual succession |
| liability | company liable without limit for its own debts - property owned by company, debt due from company |
| veil of incorporation | • Drawn between members and the company • Protects members from consequences of company’s actions |
| Salomon v Salomon & Co Ltd | a company is a distinct legal personality separate from its shareholders |
| personal guarantee | company director takes personal responsibility for paying company debts - binding agreement |
| Macaura v Northern Assurance Co Ltd | Neither a shareholder nor a simple creditor of a company has any insurable interest in any particular asset of the company. |
| 'lift the veil' | to expose commercial reality |
| Times courts lift the veil | group companies where subsidiary is agent of holding company, reveal national identity and expose illegality |
| statue lifting the veil | trading without certificate - companies act fraudulent and wrongful trading - insolvency act |
| types of company | • Limited by shares (public or private) • Limited by guarantee (private only) • Unlimited (private only) |
| Public company liability | must be limited |
| public company share capital | authorised min 50k |
| what must public companies have to commence trading | trading certificate |
| public company offers | can offer securities to public |
| public company name | must end in plc or public limited company |
| what do loans to public company connected persons need to be | authorised by members |
| private company liability | limited or unlimited |
| share capital | no min |
| when can private companies start trading | once incorporated |
| public offers - private company | prohibited |
| private company name | end in ltd or limited |
| private company loan rules | only loans directly to directors need approval |
| how many directors does public company have | at least two |
| how many company secretaries to public companies have | must have one |
| can public companies have written resolutions | no |
| public comp AGM | must hold |
| public comp accounts and reports | Lay before general meeting; file within 6 months |
| small and medium sized companies public | not applicable |
| private company directors | at least one |
| do private companies need a secretary | no |
| can private companies use written resolutions | may instead of calling meetings |
| do private companies need to hold a AGM | no |
| private company accounts and reports | file within 9 months don't need to be laid before gm |
| small and medium sized private companies | may qualify - audit exemptions and easier filing |
Created by:
TDuck