Professional Documents
Culture Documents
Business Legal Structures PPT 1
Business Legal Structures PPT 1
business legal
structure
Lisa Bebbington
2.
3.
4.
Activity..
1. Individually research a type of business
legal structure and how it is formed using the
following website:
https://www.gov.uk/business-legal-structures
2. In small groups prepare a poster. The
challenge is to summarise the main points of
your research using only 15 words!
Partnership
Defined in section 1(i) Partnership Act 1890:
The relation which subsists between
persons carrying on a business in common
with a view to profit
It is a relationship not a legal entity
separate from the partners
With a view to profit a partnership only
requires an intention to make money it is
still a partnership if you do not!
Implication
Know your partners!
Partnership agreements
The 1890 Act makes the mere
carrying on of the business in
common for profit a partnership
Partners might or might not enter into
a written partnership agreement
usually called a partnership deed
Practical formation of
partnerships
No limitation now on the number of partners
The partnership should not be for an illegal
purpose
Practical formation of
partnerships
Partnerships do not need to register the
names under which they trade
Partners cannot use the words limited,
LLP or Ltd but otherwise can trade under
any name they like so long as the Companies
Act 2006 is complied with and the name is not
designed to confuse the public
Under Companies Act 2006 partnerships must
follow rules if the partnership name is not the
surnames of all the partners i.e. a business
name
Practical formation of
partnerships
Firms must display the names of all partners
and on all business documents
Documents include business letters, written
orders for goods or services, receipts and
written demands for payment of debt.
The information must also be displayed at
premises to which customers or suppliers
have access
Non compliance is a criminal offence
Limited partners
One or more partners may have limited
liability under the Limited Partnership Act
1907
But there must always be one general
partner in a partnership
The limited partner must register with the
registrar of Companies
The general partners manage the business
and have unlimited liability
Limited partners cannot take part in
management of the firm and are not its
agents
Companies
Companies are legal persons with their own
legal rights and obligations
All companies are governed by the
Companies Act 2006
The Act has made registering a new
company easier and quicker
Running a company has also been made
simpler
Directors of a company are elected by the
shareholders the members to run the
company
The 2006 Act seeks to make directors more
accountable to shareholders
Forming a company
A company is created by registration under
the 2006 Act
Those who want to create the company the
promoters must send certain documents to
the Registrar of Companies
The Registrar (if the papers are in order)
issues a certificate of incorporation and the
company then exists as a corporate body
The company is then a separate legal entity
to its owners (the shareholders)
There need only be one member of a
company
Limited liability
Those with shares in a company only have a
commitment to pay the price of the shares
The company is liable for its debts even if
this means selling all of its assets and going
into liquidation
Companies can own property so it can
borrow money using its assets as security
The company alone is responsible for the
contracts that its owners make
It can also sue and be sued in tort
Private companies
Name must end with Limited or Ltd
No limit on share capital
Shares cannot be listed on stock exchange or
advertised for sale
Need only have one director
No need for a company secretary and if
there is one - no need for a qualified one
No Annual General Meeting unless decide to
have one
Public companies
Public companies must have at the end of
their names Public Limited Company or
plc
There must be 50,000 allotted share capital
one quarter of which must be paid up
Must have two directors
Must have a suitably qualified company
secretary
Must hold Annual General meeting every
calendar year
New legislation!
The Small Business, Enterprise and
Employment Act 2015 will open up new
opportunities for businesses in relation to
growth, competing and gaining finance.
NOTE!
Small Business, Enterprise and
Employment Act 2015
Act contains measures = significant change
for companies!
Measures change legal requirements on
companies, including what they file with
Companies House.
For details of measures and changes see:
https://www.gov.uk/government/news/the-small-business-ente
rprise-and-employment-bill-is-coming
Unlimited companies
Less than one per cent of registered companies
are unlimited companies
They do have a separate legal personality
distinct from their members for making contracts
and holding property
The members agree to assume unlimited
liability for the companys debts
They do not have to publish accounts or deliver
them to the Registrar of Companies
Companies limited by
guarantee
Most companies are limited by shares
Where companies are limited by guarantee
members liability is restricted to paying an
amount which they have agreed to pay in the
event of the company going into liquidation
The amount is usually small e.g. 5 and is set
out in the original application from registration
Most such companies are educational or
charitable not suitable for trading companies
Public companies cannot be limited by
guarantee
Articles of Association
These are the rules of the company
S18, Companies Act 2006 requires a
company to have Articles in one document
There are standard models of Articles and
one of these will apply if other Articles are not
registered
Directors
The first directors agree to become directors
when the company is registered
Unless the Articles say otherwise the
subsequent directors are appointed by an
ordinary resolution of members
In small companies the directors often own a
majority of the shares
However there is no requirement that a
director has to be a member of the company
Annual return
Every company is required to submit an annual
return to companies House
This gives basic information about the company at
a particular date the return date every year
Failing to do so within 28 days of the return date is
a criminal offence
But note changes June 2016 under the SBEE
Act 2015:
Confirmation statement
A requirement to check and confirm the company
information by filing a confirmation statement, and
notify changes if necessary at least once every 12
months. Will replace the current obligation to
file an annual return.
Case Study.
Handout read through the scenario and
answer question
Employer responsibilities:
https://
www.gov.uk/contract-types-and-employer-responsibilities
Business contracts
New legislation!
Consumer Rights Act 2015
For details see useful links below:
https://
www.gov.uk/consumer-protection-rights
https
://www.citizensadvice.org.uk/about-us/how
-citizens-advice-works/citizens-advice-co
nsumer-work/the-consumer-rights-act-2015
/