Module 16 Business Structure Flashcards
1
Q
Key characteristic of a sole trader?
A
No legal distinction between the business and the owner
2
Q
Advatages of a sole trader
A
- Limited admin so quick and easy to start
- Keeps all profits
- Not required to publish accounts
- Tax advantages when loss making
- Stright forward to change strucure or end business
3
Q
Disadvatages of a sole trader
A
- Personally liable for debts
- Options for rasing finance difficult
- Time off may be hard as they are resposible
4
Q
General partnership
A
- Minumum of 2 persons
- No maximum
- Formal partnership agreement advisable, to split profits
- No agreement will be governerd by the Partnership Act 1890 (Equal Sharing)
5
Q
Who can enter into a partnership
A
- Natrual person 16 scotland
- Natural person 18 rest of UK
- Corporate bodies
6
Q
Feature of partnership in scotland only
A
- A firm is a legal person distinct from the partners
- Does not give rise to limited liability however
7
Q
Feature of partnerships in Scotland and UK
A
- Each partner unlimited personal liability
8
Q
Advantages of a Partnership
A
- Pooling resurces and expertise
- Employess can be incentivied to be partner
- Limited admin
- Accounts do not need to be published
9
Q
Disadvantages of a partnership
A
- Partners have unlimited liability for debts
- Descions could be difficult if disagreements
- Liable for the debts caused by others
10
Q
Key characteristics of a Limited partnership
A
- At least one general partner (unlimited liability for debts)
- Other limited partners (No power to bind the firm)
11
Q
Advantages of a limited partnership
A
- Can provide funding but not expertise
- Widley used for venture captial and private equity investment trusts
12
Q
Disadvantages of limited partnership
A
- General partner has unlimited partnership
- Risk limited partner could be treated as a general partner
13
Q
Limited liability partnerships
A
- Introduced by the LLP act 2000
- Benifit from limited liabiltiy but operate similar to a traditional partnership
- LLP is a seperate legal person
14
Q
Advantages of an LLP
A
- Partners have limited liabiltiy and not liable to debts
- Flexibility in management and how profits are distributed
15
Q
Disadvantages of an LLP
A
- Accounts need to be publihsed
- Parners are taxted as if all profits have been distributed
16
Q
Companies registered under CA 2006
A
- Company is a seperate legal person
- The company is liable for the debt
- Must be public or private
- Can still be a plc without being listed
- Not all companies are registerd under CA 2006 eg BBC
17
Q
Difference between ltd and plc
A
- Plc may offer its shares to the public
- Plc is subject to more rigorous regulations
18
Q
Advanatges of a company
A
- Shareholders have limited liabiliy
- Seperate legal entity
- Can raise finance by issuing shares
- Dividend and low salaries can be used to reduce tax
19
Q
Disadvantages of a company
A
- Strict regulations
- Accounts need to be published
- Profits are not automatically to sharholders
- More shares issued the less power the founder will have
20
Q
Application for registration
A
- Proposed name
- Registred office location
- Limited or not and if so limited by shares or guarantee
- Private or public
- Intended principal business activities
21
Q
Memorandum of association
A
- Provides evidence the subscirbers intend to from a company
22
Q
Statment of capital and inital shareholdings
A
- Snapchat of the companys share capital at point of registration
23
Q
Statment of Inital significant control
A
- Will there be persons who holds more than 25% of shares
24
Q
Statment of compliance
A
A statment that CA 2006 has been compllied with
25
Articles of Association
* Form the consituation of a company
* Pay a £12 application fee
26
Company's key rules will include
* appointment or dismissal of directors
* powers, responsibilities and liabilities of directors
* admin requirments related to calling conducting or voting at general meetings
* Memebers rights
* dividend policy
27
Register of members
* Name and adress of members
* Shares each member holds
* Date becoming/ceasing to be a member
28
Register of Directors
* Names of present and former directors
* A service address
* Directors country or residence and nationality
* Date of birth
29
Register of charges
* Copies of fixed and floating charges including any amending intruments
30
Register of people with significant control
* Persons who hold more than 25% of shares
* Or right to appoint or remove directors
31
The confirmation statment
* every 12 months
* infrom the registrar about changes
32
Who is required to hold an AGM
* Public companies
* Within 6 months of the financial year end
33
Rules for AGM
* Minimum 21 day notice plc
* Minimum 14 day notice ltd (unless articles say otherwise)
* Sent to all members, hard copy or online
* Time, date, lication, subject and general nature of business
* 5% voting rights have right to propose resolutions
34
General meetings
* Directors will call meetings
* Minimum 14 days notice
* 90% ltd or 95% plc can vote to shorten thiS
* Shareholders 5% can request meeting
* Directors must call meeting within 21 day a sharhoder requests
* If directors fail to call meeting, then shareholders can themselves
35
Ordianry resolution
* 50%+1 to pass
* 14 days notice
36
Speical resolution
* Requires 75% to pass
* Notice depends on type of meeting
37
Who can pass written resolutions
* Private companies only
* Except to remove director or auditor before end or term
38
Twp types of directors
* De jure - appointed
* De facto - never officaly appotined
39
Dorchester Finance Co Ltd v Stebbings 1989
* 1 ED and 2 NEDs
* All were negligent even though non exeuctive
* Duty of care is the same with all directors
40
IDC v Cooley 1972
* He obtained a contract in his own name
* IDC sued him
* Held accountable for profits
* Avoid conflict of intrest
41
Foss v Hardbottle 1843
* The general rule
* It is for the compant itself to bring proceedings where wrong has been done
* 4 exeptions:Illegal act, special procedure, membership rights, fraud on the minority
42
Kleanthous v Paphitis 2011
* Kleanthous was not gratned to bring a derivative claim
43
What requires requires an ordinary resolution of which special notice has been given?
* Removal of a director before the expiry of their period in office
* Removal of an auditor before the expiry of their period in office
