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ICAS TC BA > Module 16 Business Structure > Flashcards

Module 16 Business Structure Flashcards

1
Q

Key characteristic of a sole trader?

A

No legal distinction between the business and the owner

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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
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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
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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)
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5
Q

Who can enter into a partnership

A
  • Natrual person 16 scotland
  • Natural person 18 rest of UK
  • Corporate bodies
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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
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7
Q

Feature of partnerships in Scotland and UK

A
  • Each partner unlimited personal liability
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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
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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
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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)
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11
Q

Advantages of a limited partnership

A
  • Can provide funding but not expertise
  • Widley used for venture captial and private equity investment trusts
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12
Q

Disadvantages of limited partnership

A
  • General partner has unlimited partnership
  • Risk limited partner could be treated as a general partner
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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
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14
Q

Advantages of an LLP

A
  • Partners have limited liabiltiy and not liable to debts
  • Flexibility in management and how profits are distributed
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15
Q

Disadvantages of an LLP

A
  • Accounts need to be publihsed
  • Parners are taxted as if all profits have been distributed
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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
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17
Q

Difference between ltd and plc

A
  • Plc may offer its shares to the public
  • Plc is subject to more rigorous regulations
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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
Q

Articles of Association

A
  • Form the consituation of a company
  • Pay a £12 application fee
26
Q

Company’s key rules will include

A
  • 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
Q

Register of members

A
  • Name and adress of members
  • Shares each member holds
  • Date becoming/ceasing to be a member
28
Q

Register of Directors

A
  • Names of present and former directors
  • A service address
  • Directors country or residence and nationality
  • Date of birth
29
Q

Register of charges

A
  • Copies of fixed and floating charges including any amending intruments
30
Q

Register of people with significant control

A
  • Persons who hold more than 25% of shares
  • Or right to appoint or remove directors
31
Q

The confirmation statment

A
  • every 12 months
  • infrom the registrar about changes
32
Q

Who is required to hold an AGM

A
  • Public companies
  • Within 6 months of the financial year end
33
Q

Rules for AGM

A
  • 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
Q

General meetings

A
  • 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
Q

Ordianry resolution

A
  • 50%+1 to pass
  • 14 days notice
36
Q

Speical resolution

A
  • Requires 75% to pass
  • Notice depends on type of meeting
37
Q

Who can pass written resolutions

A
  • Private companies only
  • Except to remove director or auditor before end or term
38
Q

Twp types of directors

A
  • De jure - appointed
  • De facto - never officaly appotined
39
Q

Dorchester Finance Co Ltd v Stebbings 1989

A
  • 1 ED and 2 NEDs
  • All were negligent even though non exeuctive
  • Duty of care is the same with all directors
40
Q

IDC v Cooley 1972

A
  • He obtained a contract in his own name
  • IDC sued him
  • Held accountable for profits
  • Avoid conflict of intrest
41
Q

Foss v Hardbottle 1843

A
  • 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
Q

Kleanthous v Paphitis 2011

A
  • Kleanthous was not gratned to bring a derivative claim
43
Q

What requires requires an ordinary resolution of which special notice has been given?

A
  • Removal of a director before the expiry of their period in office
  • Removal of an auditor before the expiry of their period in office

ICAS TC BA (16 decks)

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