Business Mediums

Question 1

What is the difference between incorporated and unincorporated businesses?

Answer 1

Unincorporated = run by individuals, not a separate legal entity;

Incorporated = separate legal entity

Question 2

What are the types of unincorporated businesses?

Answer 2

• Sole traders;
• Partnerships (min 2 designated partners);
• Limited partnerships (min one general partner)

Question 3

What are the types of incorporated businesses?

Answer 3

• Private company limited by shares;
• Public company limited by shares;
• Limited liability partnership

Question 4

What are the advantages of running as a public company?

Answer 4

+ More prestigious;
+ can raise money by offering shares to the public;
+ can join the stock market

Question 5

What are the advantages of running as a private company?

Answer 5

+ less regulation;
+ can still offer shares to the public, just harder to find a buyer

Question 6

What is the minimum number of partners for an LLP?

Answer 6

Two.

Question 7

What formalities are required to establish a partnership?

Answer 7

None - must simply be two people carrying on a trade with the view to making a profit.

Question 8

What form is used to incorporate a private company?

Answer 8

IN01, along with a memorandum of association and, potentially, articles of association (provided that it hasn’t been changed)

Question 9

What does a certificate of incorporation state?

Answer 9

• name and number of the company;
• date of incorporation;
• whether it is limited or unlimited, and if limited, whether by shares or guarantee;
• whether it is private or public;
• whether the company address is situated in England and Wales or in Scotland or NI

Question 10

How many directors do:

(i) Private; and
(ii) Public
Companies need?

Answer 10

One, two if public.

At least one director must be a natural person.

Question 11

What are the constitutional documents of a company?

Answer 11

The company’s memorandum of association and articles of association (’articles’), along
with the certificate of incorporation, current statement of capital, copies of any court orders
and legislation altering the company’s constitution, shareholders’ resolutions affecting the
constitution and certain agreements involving shareholders

Question 12

What is a shelf company?

Answer 12

A company that is set up and owned by a law firm where clients want to start running a company ASAP.