Law Deck Flashcards
The contract is made aurally so it is…
Unenforceable
Is an advertisement an offer, a supply of information or an invitation to treat.
Invitation to treat, an invitation for the buyer to make an offer.
If an offer is accepted before any revocation is received the offer is…
Valid
If one of the parties is under 18 the contract is…
Voidable
What two things must a consideration be?
Sufficient, not necessarily adequate. It must have some value but it doesn’t have to be enough.
What are the three essential elements of a contract?
Offer and acceptance, consideration, intention to create legal relations
What is a voidable contract?
The contract is binding unless one party chooses to avoid it.
What is an unenforceable contract?
The contract is valid but the parties cannot be held to its terms.
What is a void contract?
Neither party is bound
What is the postal rule?
Acceptance is complete and effective as soon as a letter is posted.
What is executed consideration?
An act in return for a promise. Eg paying for goods when they are handed over.
What is an executory consideration?
A promise in return for a promise. A promise to pay for goods when they are put on order.
What is the governing law clause or choice of law clause?
It says in an international contract which country’s laws will apply under dispute.
What is quantum meruit?
When someone is given as much as they deserve.
What is discharge by frustration?
When a contract is somehow made impossible to fulfill.
What is a mandatory injunction?
Order to take positive steps to undo something that has been done in breach of contract.
What is a prohibitory injunction?
The defendant must observe a negative promise in the contract.I.e. You promised not to do something
What is an asset-freezing injunction?
Prevents the defendant from dealing with the assets where the claimant can convince the court that he has a good cause and there is a danger of the defendants assets being exported or dissipated.
What are some types of dispute resolution
Negotiation, mediation, arbitration, adjudication, expert determination
What is UCTA
Unfair contract terms act, provides exclusion for certain clauses if they fail to satisfy a test of reasonableness
What is an agent of necessity?
When someone acts as somebody else’s agent in an emergency when they can’t get in touch with the principal, they can’t act on their own interests
What is agency by estoppel?
When the principle implies somebody is their agent and the agent acts on this even though they’re not an agent.
What is the duty of “accountability” for an agent?
That an agent must provide full information of his transactions to his principal. He can’t accept money from the people he is working with. This is considered a bribe and is fraudulent.
What is ratification?
When the relationship of prinicpal and aent is extended with retrospective effects
What conditions need to be in place for the principal to be able to ratify?
The principal must have been in existance at the time of the act, the principal must have had the legal capacity to make th econtract himself (at the time of the act and at time of ratification), the agent must have named or identified the principal who on whose behalf he is making the contract.
What is ostensible or apparent authority?
If an agent is allowed to do something more than what was required, and the principals don’t dispute this action then they have given ostensible authority and will still be liable.
What are the four ways agency can arise?
Agency by consent, estoppel, necessity or ratification
What is ostensible Authority?
The authority which the principal represents to other persons he has given to the agent.
What are he three types of authority an agent may have?
Actual express authority, Actual implied authority, ostensible or apparent authority.
What is tort?
An a act or omission by defendant that is responsible for causing injury or damage to claimant.
What are the four tests of duty of care?
Reasonableness, proximity, fair, public policy (is there a public policy requiring no duty of care?)
What is “res ipsa loquitur”?
When reason for damage isn’t known but it wouldn’t have occurred without lack of care. “The facts speak for themselves”
What are some factors in proving duty of care?
Purpose is communicated, there is a clear relationship, the knowledge of the professional, if the professional had assumed responsibility, class size, third party known to professional, reliance of claimant, foreseeability, fairness
What happens in contributory negligence defense?
Payment is fraction of how much it is their fault.
What is “volenti non fit injuria”?
When the claimant voluntary takes the legal risk.
Damages can be recovered if…
The action isn’t too remote, if there was intention then it is never too remote.
Vicarious liability is
A legal liability where a person doesn’t commit tort themselves but e.g. An employee does.
The three essential elements for a negligence claim to be successful are…
Duty of care, breech of duty, consequential damage.
To be vicariously liable the act is committed by
An employee, and the employee must have been acting in the scope of his employment.
What is the lifting of the veil?
When the veil of incorporation that separates members and a company can be lifted to expose certain actions.
Share capital of public company must be …
Subject to authorised minimum (50,000) no min for private.
If something is bought before the company was made…
It cannot be ratified, responsibility lies with the individual.
On formation of a private company limited by shares these documents must be delivered to registrar:
Memorandum of association, application with details, copy articles of association, statement of capital and initial share holdings, proposed directors, statement of compliance.
The contractual effect of a company’s constitution binds…
The company and members, not outsiders.
A provision for entrenchment is for …
Altering company articles, agreement by all members or court order. Amended article must be sent to registrar by 15 days
What is in a directors report?
Name of directors, principal activities of company, statement that the auditor is not aware of any relevant audit information.
What is in the annual return?
Address of company’s registered office, prescribed particulate of directors and secretary, type of company and principal business activity, address where register of members can be inspected, statement of capital and prescribed particulars.
What is a limited company?
The liability of the members is limited to the amount outstanding on their shares or the amount of any guarantee.
When might the veil of incorporation be lifted?
To reveal true national identity, where the company is a quasi partnership, where a company is a sham, where a subsidiary company can be regarded as an agent of the holding company.
When would statute provide for the veil of incorporation to be lifted?
Public company trading without certificate, fraudulent it wrongful trading, director carrying in business when disqualified, directors form new company with name similar to insolvent company.
A public company minimum share capital is?
£50,000 (0 for private company)
How many directors must a company have?
At least 2 if public, 1 if private.
When can a company commence trading?
Not before it has a trading certificate if public. Once incorporated if private.
If a company does business or borrows before obtaining a trading certificate the transaction is…
Valid and the directors are punishable by fine.
The memorandum of association for a company limited by shares records subscribers…
Wish to form company, agreement to become members, agreement to subscribe to at least one share.
What is an “off the shelf” company.
Eg buying a dormant company to avoid pre-incorporation contracts.
If articles of a company aren’t registered…
Default articles prescribed by Secretary of State will apply.
What is a de facto director?
Someone who acts as director and so becomes one, not appointed.
How can a company remove a director?
By passing an ordinary resolution to hat effect, special notice of 28 days must be given.
Entering into a contract if a director is express, implied or ostendible is…
binding for all types od directors.
In s 171, can more shars be allocated by director to get approval?
No
Name some of the director duties:
s171 To act within powers, s172 To promote success of the company, s173 To exercise independent judgement, s174 To exercise reaosnable care, skill and diligence. s175 to avoid conflict of interest. s176 not to accept benefits from third parties. s177 to declare interest in proposed transactions.
Conflict of interest duty isn’t infringed if it has been authorise by directors, this may happen when…
it isn’t invalidated by a private comapny’s constitution, or it is expressly allowed in a public company’s constitution.
A disqualification order for up to 15 years may be made if…
When convicted of serious offence, in the winding up of a company if there has been fraudulent trading, if the secretary of state considers it to be in public interest, director is guilty of certain breaches of competition law, director has participated in wrongful trading.
A disqualification order of up to 5 years may be made if..
where a perosn has been persistantly in default in relation to provisions of company legislation. (Three convictions for default in five years.)
A disqualification order must be made of minimum 2 years and maximum 15 years if…
If he directed a company which has been insolvent and conduct now makes him unfit for management of a company.
A bankruptcy order (for someone wanting to be a director) …
..automatically disqualifies some one from acting as director.
What is the period of disqualification for persistant default in filling annual returns is …
less than or equal to 5 years.
What is the period of disqualification for fraudulent trading …
less than or equal to 15 years.
What is the period of disqualification for wrongful trading …
less than or equal to 15 years.
What is the period of disqualification where the court considers that a directors conduct makes him unfit in the management of a company is …
2 to 15 years.
Some actions concerning directors that require approval of members in general meeting are…
service contracts, substantial property transactions, loans to directors etc., certain quasi loans, payments for loss of office (exceptions for small payments - £200). (Most are voidable if breeched).
When is member approval required for service contracts?
If a directors employment is to be of two years or more
How substantial must a property transaction (acquiral) to require approval of members?
10% of company’s asset value and is more than £5000 or exceedes £100,000.
How big must minority have to be to apply to court for cancellation?
At least 15%
What percentage must the minority be to request a company meeting?
At least 5%
What percentage must the minority be to request a notice of members’ resolutions?
At least 5%
What percentage must the minority be to request a prohibition of payment out of capital by private company or redemption of purchase of shares?
Any member can request it.
What percentage must the minority be to prevent registration of limited company as unlimited?
Can be prevented by individual members.
Can a member sue a director for lack of duties?
Not really, duties are owed to company so company is proper claimant, member can make derivative claimm on behalf of company. (Member must first make prima facie case).
When would a member be refused permission to make prima facie claim against director?
If the relevant act has been authorised by company, or if a person acting in accordance with duty to promote success wouldn’t seek claim.
In making a prima facie against a director the court will also regard…
If the member is acting in good faith, the importance someone promoting success would attatch to it, weather authorisaiton or ratification is likely, whether the company has decided no to pursue claim, whether th emember could pursue claim in own right, the views of members with no personal interest in matter.
Winding up a company to solve a dispute is rare. Exceptins are:
If the company was made for illegal or fraudulent purposes. If there is a complete deadlock of management affairs. If the directors have deliberately withheld information so shareholders had no confidence.
General meetings may be called by…
The directors, 5% of members, the court, auditor giving notice of resignation and meeting request.
General meeting of public company must be called if
Net assets fall to half or less of its share capital.
After request for meeting
Directors must call meeting within 21 days to be held within 28 day notice period. If failure, 50% members may call meeting within 3 months of initial request.
Notice of at least ____ must be given for meeting
14 days
Every public company must hold an annual general meeting …
Within six months following accounting reference date.
Notice for AGM is…
21 days
For a notice period of less than 14 days how much of share/vote holders have to consent?
95% for general meeting and 100% for AGM
Written resolution proposal may be given by directors of private company without meeting except…
To remove a director or auditor. Written resolution must be passed within 28 days from circulation.
AGMs of a public company require notice of …
21 clear days (excluding day of notice and meeting)
Special notice of 28 days needs to be given for a resolution to…
Remove auditor or remove director.
A quorum is
The minimum number of people needed at a meeting. (2) otherwise the meeting is inquorate.
Records if resolutions passed, minutes of general meeting and decisions by sole members of companies must be kept for…
10 years
How many directors must a company have?
2 if public, 1 if private
What is a shadow director?
Someone in accordance with whom the directors are accustomed to act.
What kind of resolution is needed to remove a director?
Ordinary resolution with special notice.
What indicates that the power of the directors is subject to the will of the members at a meeting?
Article alteration / capital reduction needs special resolution, borrowing power / directors office removal needs ordinary resolution.
A disqualification undertaking instead of order might be accepted by Secretary of State if…
Director is considered unfit to be concerned with company management
What is the principal advantage of a shareholders agreement?
It does not need to be registered or open to public inspection.
What requires approval of members, consequences of breech?
Service contracts (void), big property transactions (voidable), loans to directors (voidable), payment for loss of office.
Three possible actions available to minority unhappy with majority actions?
Derivative action under s260 if majority is directors, derivative action under s994 for unfairly prejudicial conduct, petition for winding up if company on just and equitable ground.
When must a public company call a general meeting?
At AGM or if net assets are half or less of called up share capital.
When can a written resolution not be used?
In a public company, to remove auditor, to remove director.
How many days notice must be given for special notice?
28 days
If a poll is taken the previous show of hand vote…
Is disregarded.
What type of share carries statutory rights of preemption in the absence of any express provision?
Ordinary shares
What type of share carries a right to a dividend at a specified rate which is deemed to be cumulative in the absence of any express or implied provision to the contrary?
Preference shares
What type of share carries an automatic right to have capital repaid in the event if the company being wound up?
Preference and ordinary
What type of share carries a right to vote in the absence of any express provision.
Preference and ordinary.
When a company decides to allot equity securities it must first…
Offer shares to holders of similar shares in proportion to their holdings. (Pre exemption rights - offer for at least 21 days)
Preference shares and the right to vote.
It is usually expressed that they don’t have the right to vote.
If there is surplus afte rrepayment on liquidation, preference share holders…
have no right to it.
Rights of shareholders can be varied, to have a variatio ncancelled …
15% of holders of a class must apply within 21 days and claim it as “unfairly prejudicial”
Unfairly prejudicial means…
the majority voted just to gain an advantage instead of considering the class interests.
What type of share carries preemption rights in absence of express provision?
Ordinary shares
What type of shares carry a right to a dividend at a specified rate which is deemed to be cumulative in the absence of any express or implied provision to the contrary?
Preference shares
What type of shares carry automatic rights to have capital repaid in the event of the company being wound up?
Preference and ordinary
What type of share carries a right to vote in the absence of any express opinion?
Preference and ordinary
If new shares are offered (equity) then first…
They must be offered to existing holders of similar shares in proportion. (Preemption rights)
Preemption right offer must be made for…
21 days
Special treatment for payment of shares in public companies is…
Must be paid in cash for subscribers, must pay up at least 1/4 of nominal value and whole of any premium amount. Long term undertaking of more than 5 years ahead not allowed. Non cash payments must e independently valued.
Can a company amend its articles of association to incorporate a provision excluding the statutory rights of pre-emotion?
Only a private company.
Shareholder must notify issuer when he holds…
3% of voting rights and every 1% thereafter.
Shareholder must notify issuer when…
He holds 3% of voting rights, and every 1% thereafter.
Companies must satisfy the authorised minimum share capital requirement of
£50,000
Limited company can reduce its capital by …
Special resolution confirmed by the court.
A private company can reduce its capital by…
Special resolution supported by a solvency agreement given by all directors.
A limited company may only purchase it’s own shares out of…
Distributable profits of the company or the proceeds of a fresh issue of shares made for the purpose of financing the purchase. (Private companies can buy their own shares more freely)
Private companies are no longer prohibited from giving
financial assistance for the acquisition of their shares.
A public company is prohibitied from giving
financial assistance at or before the time of an acquisition of shares in a public company.
The buy-back of redeemable shares out of capital for a company is
Prohibited for a public company, permitted for a private.
The purchase of a company’s own shares out of capital is
Prohibited for a public company, permitted for a private.
The provision of a loan to a director for the purpose of acquiring shares in a company is
Prohibited for a public company, permitted for a private.
A reduction of capital authorised by the court is
Permitted for a public company, permitted for a private.
Fixed and floating charges.
Fixed charges are for specific assets, related assets and disposable or deal with able by company. Floating charges are for a class of assets, no particular restrictions until crystallisation.
Charges paid back in full in order of priority
Legal before equitable and in order of time. Equitable is only first if legal chargee had notice of earlier equitable chargee.
Preference shares have a right to
Be paid dividends before others.
The right to receive a dividend for a preference share holder is
Cumulative, they have priority over ordinary shares in return of capital.
The called up share capital is
The amount for shares requested by company.
For a variation of class rights a company needs
A special resolution from at least 75% of that class.
What minimum percentage of share holders in a class may apply to the court for a variation of class rights to be cancelled
15% who have not themselves consented to the variation
Where authority to allot shares is given to directors in the company articles, what resolution is needed to vary or renew the authority?
Ordinary resolution (usually special for article alteration).. But authority to allot can be given in ordinary.
Who gets preemption rights?
Ordinary share allotments for cash, not bonus issues, part paid shares or allotments Persuant to employee share scheme.
A share premium account can be used for
Bonus issues of shares or discounts on the issue of debentures.
When a company received an instrument of transfer it must register the transfer or give notice of refusal within
2 months
How might a private company reduce to share capital?
By special resolution either approved by court or supported by a directors solvency statement
How can a company’s share capital be altered but not reduced?
Allotment of more shares, subdivision, consolidation.
Redemption of shares requires an
Ordinary resolution
What safeguards are needed for a private company to be authorised to redeem or purchase its shares out of a capital?
A directors statement, an auditors report, a special resolution, public notice of the proposed payment.
Are there restrictions for a private company providing financial assistance for the purchase of shares?
No
Can a private company purchase its own shares where they are partly paid up provided it has sufficient distributable profits?
No, only fully paid up ones.
A public company cannot make a distribution if it would reduce the company’s net assets to below the net aggregate of its
Called up share capital and undistributable reserves
Debentures, voting rights, interest and liquidation.
No voting rights, interest paid and priority in liquidation.
A floating charge
Is a charge on a class of assets, (present and future) class is in ordinary course of company business changing from time to time.
Company law requires a company to maintain
A register of charges and to make it available for public.
Crystallisation happens in
Liquidation, cessation, after giving of notice by chargee if contract provides.
After creation most charges need to be registered by
21 days
When a charge is registered the registrar must be sent
Copy of charge, date created, amount of debt it secures, property to which it applies, person entitled to it.
What remedies are available to a secured debenture holder to enforce his security?
Take possession of asset subject to charge and sell it. Appoint receiver of it.
When a company intends to wind up voluntarily but directors unable to make decision of solvency…
the liquidation proceeds as a creditors voluntary winding up even if in the end debts ar epaid in full. Liquidation not initiated by creditors.
An administrator should (in order of preference):
Rescue the company as a going concern, achieve a better result for creditors, realise assets to make distribution to secured creditors.
Appointment of an administrator can be made by…
The company, directors (most usual), creditors, qualifying floating charge holders.
An administrator must …
Take control of company’s property and use powers to manage company
Notice of appointment of administrator must be filed …
within 7 days
Statement of proposals for achieving aim of administration should be filed…
Within 8 weeks to registrar, creditors, members.
The administrator must hold accreditors meeting within …
10 weeks, proposals may be accepted or rejected.
The administrator’s appointment is terminated …
after 1 year.
During administration the following moratorium implies …
No resolution to wind up company allowed, no enforcement of fixed charges over property, no recovery of property on lease/HP, no other legal procedings.
During administration, regarding floating charge assets…
The administrator can sell floating charge assets and use proceeds for business without charges consent.
The administrator can sell assets on HP or fixed charge…
With approval of court, proceeds to pay off owner or charge.
An administrative receiver is…
Appointed by floating chargeholder, manager with control over substantial part of property/business, can take legal proceedings, pay off creditors with pref. rights…
A fixed charge receiver is…
Appointed by holder of a fixed charge. Role is to collect rent/sell property. Realise property for benefit of lender. Appointment of receiver is usually followed by crystalation.
Appointment of administrator dismisses the …
Administrative receiver.
CVA is a company voluntary arrangement to avoid being wound up it is approved by…
Simple majority in value of members, or a majority of more than 75% of creditors.
Challenge to a CVA from a creditor must…
Be given within 28 days of court being notified of results. Must show CVA unfairly prejudices his interests, or that there has been some material irregularity.
If directors of a small company wish to propose a CVA they may also apply for Moratium…
This is a proposal to creditors and gives breathing space. No winding up of company, no security over property, no crystalisaiton, meetings with consent form court nominee, nominee monitor company affairs.
On winding up, notice of special or ordinary resolution must be posted…
In the Gazette within 14 days.
Declaration of solvency must be made …
By all directors, including statement of assets and liabilities. Made less than 5 weeks before resolution to wind up is passed, delivered to registrar within 15 days after meeting.
At a voluntary liquidation, company convenes a meeting of creditors within 14 days of proposed members resolution, notice given in Gazette, in nominating liquidator…
At meeting members and creditors nominate liquidator, creditors choice takes first pick.
A compulsory winding up may happen if…
Company is unable to pay debts, or it is just and equitable to wind up company (usually done by dissatisfied member, only considered if company is solvent and he has been registered member for 6 of last 18 months prior to petition).
For compulsory wind up creditor must show…
He is owed at least £750 and it hasn’t been paid within 21 days. He has tried to get payment.
BIS (department of business, innovatin and skills) may petition for compulsorary winding up of company if…
Public company hasn’t obtained trading certificate within year of incorporation. Or from report from BIS inspectors that it is just and equitable.
On liquidation (liquidator often official receiver if appointed by court)…
Disposition of property void, legal proceedings against company halted, asset seizure is void, employees dismissed, floating charges crystallise, assets in liquidator control.
If you are owed money you can’t appoint an administrator if …
you are an unsecured creditor with no floating charge.
A liquidator must…
Settle list of contributories (members who have a liability to contribute). Collect and realise assets. Discharge company debts. Redistribute surplus to contributories.
On voluntary wind up the liquidator must…
prepare account showing how winding up was dealt with, lay it before meeting of members/creditors. Next week file details with registrar who will deem company dissolved within 3 months.
On compulsorily wind up the liquidator must…
go back to court which makes an order dissolving the company. File order and registrar records company as dissolved from this date.
Some charges may be invalidated on winding up…
Charges not registered within 21 days. Transaction at an undervalue in two years prior to liquidation unless in good faith, for business or on reasonable grounds. Floating charge within 12 months prior or 2 years if connected person.
Liquidator on winding up should (esp. if compulsorily) adhere to the following order for distributing company assets?
Liquidation costs, Preferential debts (Inc. wages, holiday pay, pension), floating charges, unsecured ordinary creditors, deferred debts, Surplus (so solvent) given to members.
If the fund available for distribution is above 10,000 the ring fencing is..
when 50% of first 10,000 is ring fenced in liquidation payment of floating charges and 20% of floating charge realisations thereafter.
An individual voluntary arrangement (IVA)…
reaches compromise with creditors, supervised by insolvency practitioners, binds all creditors and none may petition for bankruptcy. Must be approved by 75% of creditors.
For an IVA the nominee must call a creditors meeting giving notice of…
proposals of the nominees comments, list of creditors, statement of affairs, details of meeting with proxy.
Advantages of an IVA…
Continue business, flexibility, no details in press (bankruptcy yes), greater satisfaction to creditors than bankruptcy, costs less than bankruptcy.
Disadvantages of IVA
5 years (longer than bankruptcy), there’s an opportunity for a trustee to investigate debtors actions and possibility of hidden assets.
Petition for Bankruptcy is made by…
Individual, unsecured creditor who is owed more than £750 (same rules as compulsory windup), by someone bound by an approved IVA. Court hearing 14 days after petition service.
If debtor petitions for bankruptcy, court won’t make order if…
total debts less than 4000, estate would be at least 4000, debtor hasn’t been bankrupt in last 5 years or entered into composition scheme with creditors, it would be appropriate to make report leading to IVA.
Once a bankruptcy order is made the debtor becomes an undischarged bankrupt and…
cannot act as a director or insolvency practitioner, faces criminal liability for failure to cooperate with official receiver, can’t practice as chartered accountant.
The trustee for bankruptcy requires creditors to prove debts then ranks them in the order of…
Costs, pre-preferential debts, preferential debts (wages, pension, holiday pay), ordinary debts, interest, postponed debts, surplus - returned to the bankrupt.
A bankruptcy is discharged at …
one year after the order, but may be subject to bankruptcy restrictions for between 2 and 15 years.
Who can apply for an administration order but can’t appoint administrator out of court?
Creditor with no minimum value of debt.
The normal duration of a CVA (compulsory voluntary arrangement) is…
3-5 years.
The two most important grounds for compulsory liquidation are…
company can’t pay it’s debts, it’s just an equitable to wind up company.
How are the powers of the members’ nominee liquidator restricted pending creditors meeting?
Can only take control of property, dispose of perishable goods, do things for protection of assets.
In compulsory winding up who will the court appoint as liquidator?
The official receiver.
To avoid a charge in insolvency of floating charge in favour of unconnected person how recent must it be?
1 year
To avoid a charge in insolvency of transaction at an undervalue how recent must it be?
2 years
To avoid a charge in insolvency of preference in favour of an unconnected person how recent must it be?
6 months
What are the elements of a compulsory liquidation order?
Official receiver is liquidator, liquidation deemed to commence when petition presented, disposition of property since liquidation void, legal proceedings against company halted, employees dismissed, floating charges crystallise,
Can an individual subject to IVA still act as a director or a company?
Yes
The word ‘Firm’ is for…
A partnership only, not for registered company.
In absence of a partnership agreement follow the partnership act of 1890 which …
Sets out basic rights and duties of partners, rights to share profits, take part in business decisions, veto new partners, duty to share losses and indemnify other partners.
Particulars of the partnership act regarding, interest on capital, remuneration, new partners, expulsion,
None is paid except in agreement but entitled to 5% beyond original capital, no remuneration, unanimous vote on new partners, expulsion by majority votes.
Expulsion in a partnership…
Must be in good faith, not just if they don’t like his ideas.
In a partnership, all partners are bound by…
what other partners do for the firm unless it is expressly decided. Unless the partner pledges credit not related to business (unless express authority).
If there is a restriction on a partner and a third party is aware…
no act is binding. If third party believes there is authority then there is (even if retired people included).
Partnership is dissolved upon…
death or bankruptcy of partner, expiry of fixed term partnership, completion of joint venture, subsequent liability, notice given by partner, order of court (if just and equitable).
Disadvantages of a incorporation over a partnership are…
File accounts with registrar, must be registered, cost of compliance and admin and annual audit, documents open to public, strict rules on capital repayment.
A company’s liability is…
Unlimited, it is the members’ liability that is limited.
In a limited liability partnership…
there is a separate legal entity from members (whose liability is limited), members are taxed on individual profits.
In a limited partnership…
One partner has unlimited liability and control of management. Others cannot manage, or bind partnership. Liability is limited to capital.
For formation of LLP use an incorporation document that states…
Name of LLP, location of office, names of members, two members who can sign notices. Changes of partnership told to Registrar within 14 days.
LLP is required to:
maintain register of charges, notify registrar of membership change, provide name of LLP, deliver annual return to Registrar.
LLP and auditing…
An LLP is normally subject to requirement to have it’s accounts audited.
LLP insolvency rules are similar to companies except…
withdrawals made by members within 2 years prior to winding up can be clawed back if member had grounds to believe it would become insolvent, on wind up, past and present members may need to contribute to assets.
What are some rights of partners?
Involved in decisions, share profits, examine accounts, insist on openness and honesty, veto new partners, to be indemnified by other partners.
What must an LLP deliver to the Registrar annually?
Audited documents and annual return.
Whistleblowing protection is received if the disclosure is…
A qualifying disclosure of information, made in public interest, made to the appropriate person.
Qualifying whistle blowing disclosures show…
Criminal offences, failures of legal obligations, miscarriage of justice, health and safety and environmental concerns, concealed information about these.
