Business Law and Practice Revision Notes
PARTNERSHIP
Trading Vehicles:
- Sole Trader: one person runs and owns assets, taxed through income and complete
personal liability.
- Partnership: “business in common with a view to making a profit” (s 1, Partnership Act
1890) – can arise inadvertently if criteria met. Lawyers needed to make rules for agreement
otherwise all under PA 1890 = inappropriate for their situation, e.g. no requirement for
using time and attention. Your portion under income tax and can sue each partner for debts.
- Limited Liability Partnership (LLP): most law firms, under LLP Act 2000. If sued for debts, all
can get from partners is amount initially invested.
- Companies: PLC (Public Company Limited by Shares) or Ltd (Private “ “ “), or Charter, etc.
Companies have SEPARATE LEGAL PERSONALITY. Factortame: fishing vessel all Spanish crew
and owns but registered in UK so able to use UK quotas. Debts belong to company, not
owners – Saloman v Saloman: business was incorporated and bought prev work from Mr
Saloman with family as shareholders. He was a secured creditor, paid before other creditors.
Companies also have LIMITED LIABILITY = most can lose is amount unpaid on initial share
purchase. In practice, would be asked for personal guarantees before loans to make liable.
Must file onerous amount of documentation and make some director/shareholder(member)
info public. Fundamental decisions for shareholders ordinary/special resolution, normal by
director board resolution – can see Companies Act 2006 or Model Articles (see my Decision
Grid) for details, can amend most in Special Articles depending on needs of company. May
have “sandwich” of BM-GM-BM2.
On formation, register initial shareholders and share capital, etc and incorporation/
constitutional documents, and can strike off director if not do ongoing filing. Articles of
Association not overrule CA if definitive, pre-2009 = Table A.
Private Company Limited by Shares:
- Cannot offer shares to the public.
- Officers = directors/company secretary. Directors each have one vote in board meetings.
- Shareholders = members in CA. Voting weighted by shares owned, so >50% ≈ all decisions.
- Need “limited” or “ltd” at end of name, as well as restrictions on existing/previous
company names / suggest connection with govt or public body / scurrilous.
- No min issued share capital (or virtually no, £1 sufficient in reality) = risk to creditors.
- No statutory restriction on paying full amount on issue of shares, but liable for remaining
if goes insolvent.
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PARTNERSHIP
Trading Vehicles:
- Sole Trader: one person runs and owns assets, taxed through income and complete
personal liability.
- Partnership: “business in common with a view to making a profit” (s 1, Partnership Act
1890) – can arise inadvertently if criteria met. Lawyers needed to make rules for agreement
otherwise all under PA 1890 = inappropriate for their situation, e.g. no requirement for
using time and attention. Your portion under income tax and can sue each partner for debts.
- Limited Liability Partnership (LLP): most law firms, under LLP Act 2000. If sued for debts, all
can get from partners is amount initially invested.
- Companies: PLC (Public Company Limited by Shares) or Ltd (Private “ “ “), or Charter, etc.
Companies have SEPARATE LEGAL PERSONALITY. Factortame: fishing vessel all Spanish crew
and owns but registered in UK so able to use UK quotas. Debts belong to company, not
owners – Saloman v Saloman: business was incorporated and bought prev work from Mr
Saloman with family as shareholders. He was a secured creditor, paid before other creditors.
Companies also have LIMITED LIABILITY = most can lose is amount unpaid on initial share
purchase. In practice, would be asked for personal guarantees before loans to make liable.
Must file onerous amount of documentation and make some director/shareholder(member)
info public. Fundamental decisions for shareholders ordinary/special resolution, normal by
director board resolution – can see Companies Act 2006 or Model Articles (see my Decision
Grid) for details, can amend most in Special Articles depending on needs of company. May
have “sandwich” of BM-GM-BM2.
On formation, register initial shareholders and share capital, etc and incorporation/
constitutional documents, and can strike off director if not do ongoing filing. Articles of
Association not overrule CA if definitive, pre-2009 = Table A.
Private Company Limited by Shares:
- Cannot offer shares to the public.
- Officers = directors/company secretary. Directors each have one vote in board meetings.
- Shareholders = members in CA. Voting weighted by shares owned, so >50% ≈ all decisions.
- Need “limited” or “ltd” at end of name, as well as restrictions on existing/previous
company names / suggest connection with govt or public body / scurrilous.
- No min issued share capital (or virtually no, £1 sufficient in reality) = risk to creditors.
- No statutory restriction on paying full amount on issue of shares, but liable for remaining
if goes insolvent.
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