Different Legal Forms of Business
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Different Legal Forms of Business

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@Callum Sirker

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Questions and Answers

What is one of the primary reasons businesses are established?

  • To expand into international markets
  • To remain competitive in the industry
  • To offer employment opportunities
  • To make a profit (correct)

    • Which business structure is characterized by having at least one general partner and one limited partner?

  • Limited liability partnership
  • Limited partnership (correct)
  • Partnership
  • Sole trader

    • What governs the operations of companies in England and Wales?

  • Companies Act 1990
  • Charities Act 2011
  • Corporate Governance Code
  • Companies Act 2006 (correct)

    • Which of the following is NOT a characteristic of a sole trader business model?

    <p>Ability to raise capital through stock issuance</p> Signup and view all the answers

    How are profits typically handled in a business after they are realized?

    <p>Shared between owners and retained for growth</p> Signup and view all the answers

    What defines a limited liability partnership (LLP)?

    <p>Partners have limited liability for business debts</p> Signup and view all the answers

    Which of the following best describes the typical governance structure of public listed companies?

    <p>Governed by a board of directors elected by shareholders</p> Signup and view all the answers

    What is the primary characteristic that differentiates a private company from a public company?

    <p>Private companies cannot issue shares to the public</p> Signup and view all the answers

    What is the minimum age requirement for a director under CA 2006?

    <p>16 years old</p> Signup and view all the answers

    What is the primary purpose of having at least one individual director?

    <p>To ensure accountability</p> Signup and view all the answers

    Which type of director is required to spend most of their time working on company business?

    <p>Executive director</p> Signup and view all the answers

    According to CA 2006, which type of directors do not participate in daily operations of the company?

    <p>Non-executive directors</p> Signup and view all the answers

    What defines a 'shadow director' under CA 2006?

    <p>A person whose directions directors are accustomed to follow</p> Signup and view all the answers

    Which of the following statements is true about the roles of directors and shareholders in small private companies?

    <p>They are often held by different people but remain separate.</p> Signup and view all the answers

    Under which section of CA 2006 is the role of a shadow director defined?

    <p>s 251 CA 2006</p> Signup and view all the answers

    What characterizes the responsibilities of all types of directors under CA 2006 and insolvency legislation?

    <p>They owe the same duties to the company.</p> Signup and view all the answers

    What is a key characteristic that differentiates an LLP from a sole trader or traditional partnership?

    <p>Ability to own property and enter into contracts independently</p> Signup and view all the answers

    In a Limited Liability Partnership, how are the members typically taxed?

    <p>As partners in a partnership</p> Signup and view all the answers

    Which organization is responsible for registering Limited Liability Partnerships?

    <p>Companies House</p> Signup and view all the answers

    What happens in the absence of a formal Members’ Agreement in an LLP?

    <p>Members share capital and profits equally</p> Signup and view all the answers

    What rights do members in a Limited Liability Partnership have regarding decision making?

    <p>Majority of members can decide on ordinary decisions</p> Signup and view all the answers

    Which of the following statements is true regarding the management of an LLP?

    <p>Every member may participate in management without entitlement to payment</p> Signup and view all the answers

    What is required for a member to assign their membership in an LLP?

    <p>Consent of all existing members</p> Signup and view all the answers

    What is the liability of members in an LLP regarding third parties?

    <p>Liability limited to the agreed amount in the partnership agreement</p> Signup and view all the answers

    What constitutes a valid quorum for a board meeting according to Article 11(2) MA?

    <p>At least two directors must be present.</p> Signup and view all the answers

    In which scenario is a referral to shareholders necessary?

    <p>For actions outside the powers of the directors.</p> Signup and view all the answers

    What is the usual method for passing board resolutions during a meeting?

    <p>Majority vote on a show of hands.</p> Signup and view all the answers

    What is required for reasonable notice of a board meeting if directors are located in different buildings?

    <p>A few days to weeks' notice.</p> Signup and view all the answers

    Which role might be empowered to call a board meeting?

    <p>Any director or the company secretary.</p> Signup and view all the answers

    What is a potential limitation on the chairman regarding casting votes?

    <p>The casting vote depends on the company's Articles.</p> Signup and view all the answers

    What can be considered a common requirement for board meetings based on Browne v La Trinidad?

    <p>Directors need to provide customary notice.</p> Signup and view all the answers

    Which of these is NOT an example of a situation where shareholder approval is required?

    <p>Finalizing a director's compensation.</p> Signup and view all the answers

    What must be included in the application for incorporation if the company has a share capital?

    <p>A statement of capital and initial shareholdings</p> Signup and view all the answers

    What document is issued to a company once its incorporation application is approved?

    <p>Certificate of Incorporation</p> Signup and view all the answers

    What is the primary advantage of using a shelf company?

    <p>It can be established quickly without incorporation documentation</p> Signup and view all the answers

    What information is NOT included in the certificate of incorporation?

    <p>The company's registered office address</p> Signup and view all the answers

    Under what circumstance must a company provide details of the guarantee in its incorporation application?

    <p>When it is limited by guarantee</p> Signup and view all the answers

    What identifies a company legally after its incorporation?

    <p>The registered number assigned to it</p> Signup and view all the answers

    Which statement is incorrect about the incorporation process?

    <p>The company can be registered without any shareholding information</p> Signup and view all the answers

    What element of a company’s certificate can be changed later?

    <p>The name of the company</p> Signup and view all the answers

    Study Notes

    • Key business structures are sole trader, partnership, limited partnership, limited liability partnership, private company, and public company.
    • Sole trader is a business structure where a single individual is responsible for all aspects of the business, including the risks and liabilities.
    • Partnership is a business structure where two or more individuals agree to share the profits and losses of their business.
    • Limited partnership is a type of partnership with two types of partners: general partners who manage the business and have unlimited liability, and limited partners who invest but do not actively manage the business and have limited liability.
    • Limited liability partnership (LLP) is a business structure that offers its partners limited liability, meaning the partners are only liable for the amount they contribute, similar to a company.

    Company Law

    • The Companies Act 2006 governs all companies in England and Wales.
    • Certificate of incorporation is a document issued by the Registrar of Companies confirming the existence of a company as a legal entity.
    • Public companies are allowed to offer their shares to the general public and are required to meet certain regulatory requirements.
    • Private companies restrict share ownership to a small number of individuals and are not legally obliged to publish financial information.
    • Shelf companies are pre-incorporated companies that can be purchased and used quickly as a business structure.

    Directors

    • A company must have at least one director who is a natural person.
    • Directors owe certain duties to the company, including duty of care, duty of skill, and duty of loyalty.
    • Different types of directors include executive directors, non-executive directors, shadow directors, de facto directors, and alternate directors.

    Board Meetings

    • Board meetings are held by directors to make decisions on company business.
    • All directors must receive reasonable notice of the board meeting.
    • Quorum is the minimum number of directors required to be present for a valid board decision.
    • Voting at board meetings is typically done by a show of hands, with each director having one vote.

    Matters Referred to Shareholders

    • Certain decisions require approval by the shareholders, such as:
      • Amendments to the company's articles of association
      • Changes to the company's constitution
    • This ensures that the company operates in accordance with the wishes of its owners.

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    Company Law Workbook PDF

    Description

    Explore the various legal structures for businesses including sole traders, partnerships, and limited liability partnerships. Understand the differences, responsibilities, and liabilities associated with each business form. This quiz will help you grasp key concepts relevant to company law and business operations.

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