Introduction to business law Flashcards
How is a sole trader taxed for income and CGT purposes?
- Any profits made taxed as individual’s income
- Any gains on one-off transaction charged as CGT
What is the difference between how a partnership and LLP is taxed?
Not different - both tax transparent; partners taxed on individual share of profits and chargeable gains as either income or CGT
How does a company pay tax?
Corporation tax at flat rate on taxable total profits (TTP) made up of company’s income profits and capital gains
What is meant by double taxation on profits in the context of companies?
- Company pays corporation tax on profits
- Pays dividends to shareholder which will be taxed on income tax
When can a private company, who has converted to a public company, begin trading as a Plc?
Once the new certificate of incorporation and trading certificate showing company’s allotted share capital is not less than minimum has been issued by Registrar
What is a listed company?
Company whose shares are listed on a recognised stock exchange (allows commercial investors freedom to deal)
Not all public companies apply to have shares listed
How do listed companies operate their various businesses?
Through private company subsidiaries (not listed but affected by governing rules of listed holding companies)
Why does a listed company need greater regulation than private companies?
They have 1000s of shareholders only a few of whom have any managerial role at all - need more regulation to ensure accountability of directors as an individual shareholder will not normally have any access to the board
What is the difference between a private and public companyin terms of how resolutions can be passed?
A private company can pass shareholder resolutions as written resolutions (bar for removing director/auditor), a public company cannot
Private / Written
What is the difference in public and private companies re offering shares?
- Private prohibited from offering shares to public at large
- Public companies can raise further equity by applying for listing to access a wider investor base (inc international debt capital markets)
Is an AGM required for all companies?
Only public, but private can if it wants
What is the minimum share capital to be issued for a private and public company?
- Private - one share (could be only 1 share of 1p)
- Public - minimum of £50,000
When can a private and public company commence trading?
Re certificates they have to receive
- Private - can start as soon as incorporated (certificate of incorporation)
- Public - can start when a trading certificate is issued by Registrar showing that company’s allotted share capital is not less than minimum
What are the consequences of a company having separate legal personality?
- Continues to exist even if shareholders/directors change (is an entity itself)
- Directors owe duties to company, not shareholders
- Company owns own property and enters into contracts (and enjoys benefits and liabilities)
- Company sues and sued on its own
Who do shareholders and TPs have rights against?
The company, rather than directors
Even though creditors will negotiate with directors!