BUSINESS LAW AND PRACTICE (KNOWLEDGE)
Unit Workshop 16
Incorporation
Outcomes
As mentioned in the workshop description, by the end of the workshop you should be
able to:
1. Advise on the procedural aspects of converting an unincorporated business into
a business run through the medium of a private limited company. (Prep task 2,
workshop task)
2. Identify the main features of a general partnership and a LLP and explain how
these differ from and are similar to the features of a company. (Prep task 1)
3. Explain the difference between a LP and a LLP. (Prep task 1)
Preparatory Task 1
Question (a) and (b): The purpose of this task is for you to identify the alternative
partnership structures that will fit Mayson’s requirements. You should identify a
company, a limited liability partnership and a general partnership as the alternative
structures. You may also consider a limited partnership, but the grid attached to the
task leads you in the direction of a co, LLP and partnership and Qd) points you
towards thinking of a LP as a separate consideration. The suggested answer
appears as an appendix to these notes.
Question (c): You do not have enough information to be sure about which structure
would be Mayson’s preferred structure, but you should identify that an LLP offers the
advantage of limited liability and less paperwork than a company, so in general terms
is often the best option. As a member of an LLP Mayson will retain tax transparency
for any profits and gains arising from the project and also be able to participate in the
management and day to day running of the project.
Question (d):
Like a general partnership, a limited partnership can be formed by two or more
persons, there is no maximum number of partners and it is not a separate legal
entity. It comprises one or more general partners and one or more limited partners.
There is limited liability for limited partners (but not general partners) provided the LP
has been established under the Limited Partnership Act 1907. In order to retain
limited liability status, limited partners cannot participate in the management of the
LP.
LPs must be registered under the 1907 Act on the register of limited partnerships at
Companies House.
, For general partners, there is no restriction on withdrawal of capital (although note
that the parties may contractually agree otherwise). Limited partners may not
withdraw any part of their capital during the life of the partnership but if they do so in
breach of the Act they are liable for the debts and obligations of the firm up to the
amount withdrawn.
Note that if a Limited Partnership were created, Mayson would retain tax
transparency, but in order to limit its liability, it would have to be a Limited Partner
and therefore it would not be able to participate in the management of the project.
Unit Workshop 16
Incorporation
Outcomes
As mentioned in the workshop description, by the end of the workshop you should be
able to:
1. Advise on the procedural aspects of converting an unincorporated business into
a business run through the medium of a private limited company. (Prep task 2,
workshop task)
2. Identify the main features of a general partnership and a LLP and explain how
these differ from and are similar to the features of a company. (Prep task 1)
3. Explain the difference between a LP and a LLP. (Prep task 1)
Preparatory Task 1
Question (a) and (b): The purpose of this task is for you to identify the alternative
partnership structures that will fit Mayson’s requirements. You should identify a
company, a limited liability partnership and a general partnership as the alternative
structures. You may also consider a limited partnership, but the grid attached to the
task leads you in the direction of a co, LLP and partnership and Qd) points you
towards thinking of a LP as a separate consideration. The suggested answer
appears as an appendix to these notes.
Question (c): You do not have enough information to be sure about which structure
would be Mayson’s preferred structure, but you should identify that an LLP offers the
advantage of limited liability and less paperwork than a company, so in general terms
is often the best option. As a member of an LLP Mayson will retain tax transparency
for any profits and gains arising from the project and also be able to participate in the
management and day to day running of the project.
Question (d):
Like a general partnership, a limited partnership can be formed by two or more
persons, there is no maximum number of partners and it is not a separate legal
entity. It comprises one or more general partners and one or more limited partners.
There is limited liability for limited partners (but not general partners) provided the LP
has been established under the Limited Partnership Act 1907. In order to retain
limited liability status, limited partners cannot participate in the management of the
LP.
LPs must be registered under the 1907 Act on the register of limited partnerships at
Companies House.
, For general partners, there is no restriction on withdrawal of capital (although note
that the parties may contractually agree otherwise). Limited partners may not
withdraw any part of their capital during the life of the partnership but if they do so in
breach of the Act they are liable for the debts and obligations of the firm up to the
amount withdrawn.
Note that if a Limited Partnership were created, Mayson would retain tax
transparency, but in order to limit its liability, it would have to be a Limited Partner
and therefore it would not be able to participate in the management of the project.
