Unit 1
Sole traders General Partnerships Limited Liability Private Limited Public Limited Companies
Partnerships Companies
Separate legal No No Yes Yes Yes
personality?
Liability Unlimited Joint & several liability Limited liability to the Shareholder limited Shareholder limited liability
liability Unlimited amount of money liability to their shares to their shares
invested by each partner
Owners Sole Trader - 1 Partners (2 or more) Partners at least 2 S/holders - 1 S/holders (open to the stock
market) - 1
Managers Sole trader Partners Partners Directors Directors
Decision-making Sole trader Equal votes unless Partners - Majority of Directors & S/holders Directors & S/holders
agreed otherwise. voters (unless specific powers are
PA: unanimous delegated to the individual
agreement for some director/s)
changes
Ownership of personal Held individually by The partnership Owned by the company Owned by the company
property and ownership partners
assets
Accounts N/A No Publish on Companies Published and filed with Yes
House CH
Public accounts
Security Fixed Only Fixed Only Fixed and floating Floating or fixed Fixed and Floating Charges
chargers charges/debentures
Duties on Common Law To act in the utmost Statutory duties under the Duties under: Duties under:
managers good faith: Insolvency Act, LLPA & Companies Act Companies Act
Fiduciary duties Insolvency Act Insolvency Act
1) To account for Fiduciary duties Fiduciary duties
private profit
2) To not compete with
the business
3) To be open with any
relevant info
1
,Termination Stop trading Mutual agreement; Apply to dissolve Liquidation Liquidation
Serving a notice Majority members have
to sign off
Constitution No No LLP Regulations Articles of Association & Articles of Association &
Memo of Association Memo of Association
Incorporation No No formalities LLIN01 - file company’s Register with CH using 1) File at Companies House:
formalities house & deed IN01 form & fee
Receive a certificate of 2) Special Resolution,
incorporation
3) Re-register with Form
RR01 including
- statement of
compliance,
- fee for
re-registration,
- revised articles,
- balance sheet
- written statement
from company’s
auditors
- valuation report on
shares allocated for
non-cash
consideration
between date of
balance sheet and
passing of special
resolution.
Tax Income tax Taxed separately as Income tax & CGT Corporation tax Corporation tax
Capital gains self-employed
tax individuals – Income
Tax and CGT
PRIVATE companies limited by shares
When is it formed By registering certain documents with the Registrar of Companies in
accordance with the requirement of the CA 2006
Legal personality Salomon v A Salomon and Co Ltd [1897] AC 22
- As long as a company is legally incorporated it must be treated like any
other independent person with rights and liabilities
Prest v Petrodel Resources Limited and other [2013] UKSC 34
- the corporate veil could only be pierced when a person is under an
existing legal obligation or liability or is subject to an existing legal
2
, restriction which he deliberately evades by imposing a company under
his control
Decision-making Decisions are made by the company’s directors or shareholders
Directors:
- Run the company
Shareholders:
- Provide the money to operate the company
Disadvantage - They can only offer shares to a person already connected with the
company or targeted individuals (s756 CA 2006)
PUBLIC companies limited by shares
When is it formed Must have complied with the requirements of the CA 2006
For a company to be public - The constitution must state that it is public
- The words plc must be in the name
- The owners must invest an allotted share capital of stleast £50,000
(s761 and s763 CA 2006)
- Each allotted share must be paid up to at least a quarter of its nominal
value + the whole of any premium on it (s586 CA 2006)
Advantage - They can offer shares to the public (s755 CA 2006)
Forming a private limited company
Incorporation requirements Filing at CH - electronically or on paper
- File form IN01
- A memorandum of association
- Possibly a company’s articles of association
- Applicable fee
IN01 Includes:
- Name of company
- Name and date of birth of first directors
- Name and date of birth of first shareholders
- Registered office address
- Email address
- Directors residential and service address
- Statement of capital
Checks done agains the The Disqualified Director’s Register checks that the proposed directors have not
company bee disqualified
3
, And checks if the correct fees have been paid
When is the company Comes into existence upon the certificate of incorporation being issued (s15(4)
incorporated and 16(2) CA 2006)
The certificate of incorporation s15 CA 2006: the certificate must state
- The name and registered number of the company
- The date of its incorporation
- Whether it is a limited or unlimited company
- Is it limited by shares or a guarantee
- Whether it is a private or public company
- Whether the company’s registered office is in England, Wales, Scotland
or Northern Ireland
The certificate will be signed by the Registrar or authenticated by the
Registrar’s official seal
HMRC registration Companies must register with HMRC for corporation tax
- If the application was made online tax automatically applies
- If by post then a separate application to HMRC must be made within 3
months of starting to do business
Company name IN01 form requires the company name
Restrictions on names:
- Private companies must end with ltd
- Public companies must end with plc
- The name cannot exceed 160 characters including spaces (ECCTA
2023)
Under ECCTA 2023 - CH can reject an application to register a name where it
believes that the name
- Is intended to facilitate fraud
- Is comprised of or contains a computer code or
- Is likely to give the false impression that the company is connected to a
foreign government or interntational organisation whose members
include 2 or more countries or territories
Changing the name after being directed to:
- If the company does not change the name within 28 days of being
directed - the CH can choose a new name for the company or suppress
a name from the register
- It is an offence not to change the name within 28 days
Similar names - The name must not be the same as an existing company (s66 CA 2006)
- A company’s name will be deemed as the same even if not identical
(Names Regulation 2015)
- A company can only register a same name if the company wil be part of
the same ground as the company of the existing name
- A written confirmation that the existing company does not object
4
Sole traders General Partnerships Limited Liability Private Limited Public Limited Companies
Partnerships Companies
Separate legal No No Yes Yes Yes
personality?
Liability Unlimited Joint & several liability Limited liability to the Shareholder limited Shareholder limited liability
liability Unlimited amount of money liability to their shares to their shares
invested by each partner
Owners Sole Trader - 1 Partners (2 or more) Partners at least 2 S/holders - 1 S/holders (open to the stock
market) - 1
Managers Sole trader Partners Partners Directors Directors
Decision-making Sole trader Equal votes unless Partners - Majority of Directors & S/holders Directors & S/holders
agreed otherwise. voters (unless specific powers are
PA: unanimous delegated to the individual
agreement for some director/s)
changes
Ownership of personal Held individually by The partnership Owned by the company Owned by the company
property and ownership partners
assets
Accounts N/A No Publish on Companies Published and filed with Yes
House CH
Public accounts
Security Fixed Only Fixed Only Fixed and floating Floating or fixed Fixed and Floating Charges
chargers charges/debentures
Duties on Common Law To act in the utmost Statutory duties under the Duties under: Duties under:
managers good faith: Insolvency Act, LLPA & Companies Act Companies Act
Fiduciary duties Insolvency Act Insolvency Act
1) To account for Fiduciary duties Fiduciary duties
private profit
2) To not compete with
the business
3) To be open with any
relevant info
1
,Termination Stop trading Mutual agreement; Apply to dissolve Liquidation Liquidation
Serving a notice Majority members have
to sign off
Constitution No No LLP Regulations Articles of Association & Articles of Association &
Memo of Association Memo of Association
Incorporation No No formalities LLIN01 - file company’s Register with CH using 1) File at Companies House:
formalities house & deed IN01 form & fee
Receive a certificate of 2) Special Resolution,
incorporation
3) Re-register with Form
RR01 including
- statement of
compliance,
- fee for
re-registration,
- revised articles,
- balance sheet
- written statement
from company’s
auditors
- valuation report on
shares allocated for
non-cash
consideration
between date of
balance sheet and
passing of special
resolution.
Tax Income tax Taxed separately as Income tax & CGT Corporation tax Corporation tax
Capital gains self-employed
tax individuals – Income
Tax and CGT
PRIVATE companies limited by shares
When is it formed By registering certain documents with the Registrar of Companies in
accordance with the requirement of the CA 2006
Legal personality Salomon v A Salomon and Co Ltd [1897] AC 22
- As long as a company is legally incorporated it must be treated like any
other independent person with rights and liabilities
Prest v Petrodel Resources Limited and other [2013] UKSC 34
- the corporate veil could only be pierced when a person is under an
existing legal obligation or liability or is subject to an existing legal
2
, restriction which he deliberately evades by imposing a company under
his control
Decision-making Decisions are made by the company’s directors or shareholders
Directors:
- Run the company
Shareholders:
- Provide the money to operate the company
Disadvantage - They can only offer shares to a person already connected with the
company or targeted individuals (s756 CA 2006)
PUBLIC companies limited by shares
When is it formed Must have complied with the requirements of the CA 2006
For a company to be public - The constitution must state that it is public
- The words plc must be in the name
- The owners must invest an allotted share capital of stleast £50,000
(s761 and s763 CA 2006)
- Each allotted share must be paid up to at least a quarter of its nominal
value + the whole of any premium on it (s586 CA 2006)
Advantage - They can offer shares to the public (s755 CA 2006)
Forming a private limited company
Incorporation requirements Filing at CH - electronically or on paper
- File form IN01
- A memorandum of association
- Possibly a company’s articles of association
- Applicable fee
IN01 Includes:
- Name of company
- Name and date of birth of first directors
- Name and date of birth of first shareholders
- Registered office address
- Email address
- Directors residential and service address
- Statement of capital
Checks done agains the The Disqualified Director’s Register checks that the proposed directors have not
company bee disqualified
3
, And checks if the correct fees have been paid
When is the company Comes into existence upon the certificate of incorporation being issued (s15(4)
incorporated and 16(2) CA 2006)
The certificate of incorporation s15 CA 2006: the certificate must state
- The name and registered number of the company
- The date of its incorporation
- Whether it is a limited or unlimited company
- Is it limited by shares or a guarantee
- Whether it is a private or public company
- Whether the company’s registered office is in England, Wales, Scotland
or Northern Ireland
The certificate will be signed by the Registrar or authenticated by the
Registrar’s official seal
HMRC registration Companies must register with HMRC for corporation tax
- If the application was made online tax automatically applies
- If by post then a separate application to HMRC must be made within 3
months of starting to do business
Company name IN01 form requires the company name
Restrictions on names:
- Private companies must end with ltd
- Public companies must end with plc
- The name cannot exceed 160 characters including spaces (ECCTA
2023)
Under ECCTA 2023 - CH can reject an application to register a name where it
believes that the name
- Is intended to facilitate fraud
- Is comprised of or contains a computer code or
- Is likely to give the false impression that the company is connected to a
foreign government or interntational organisation whose members
include 2 or more countries or territories
Changing the name after being directed to:
- If the company does not change the name within 28 days of being
directed - the CH can choose a new name for the company or suppress
a name from the register
- It is an offence not to change the name within 28 days
Similar names - The name must not be the same as an existing company (s66 CA 2006)
- A company’s name will be deemed as the same even if not identical
(Names Regulation 2015)
- A company can only register a same name if the company wil be part of
the same ground as the company of the existing name
- A written confirmation that the existing company does not object
4
