Business
Sole Trader General Pshp Limited Pshp LLP Lmtd Company (private)
Formation Unincorp - Unincorporated - don't Must register - Only exists Must register - Only exists once properly Promoters register, or can buy shelf company
low admin need PK once properly filed and filed and Cert. of Incorpxn issued
costs Cert. of Incorpxn issued Only exists once properly filed and Cert. of
DEFN: >2 persons carrying DEFN: >2 persons carrying on business in Incorpxn issued
on business in common DEFN: >2 persons carrying common with view to profit
with view to profit on business in common Owners = members
with view to profit
Liability Unlimited If P acts in ordinary course General P: ≥1 P must have Partners not liable beyond investment SH not liable beyond investment - no liab if
personal of Pshp business then unlimited personal share paid in full
unlimited personal joint
and several - e/ liable for all Limited P: limited to capital Corporate veil unlikely pierced so look for dif
**PK cannot change contrib liab of D/SH (civil or criminal) - C only formed
to do fraud or avoid existing obligations
If public trading w/o trading cert, D personally
liab for any losses
Manage By the person All unless PK states Only General P ≥2 Designated members file, but all BOD in BIOC, unless insolvent then
members manage equally unless PK BIOCreditors
Can have EEs
Owners = members Owners = members
Transfer Can sell Only transfer w/ unanimous Only transfer w/ unanimous Only transfer w/ unanimous consent SH can transfer
whenever consent consent
File with No No requirement - keep Must file Must file Must file: Accounts; Annual Returns w/in 14
Registrar requirement books at business days of end of 12m period w/ Stmnt of
Capital; if Large - Annual Ds Report & Annual
Strategic Report
Tax ST pays P pays income tax - P taxed P pays income tax - P taxed P pays income tax on his share of profits SH pays income tax on dividends
income tax on their share of profits on their share of profits
even if they’re left in Pshp even if they’re left in Pshp LLP not taxable entity C pays corporation tax
that year that year
Raising $ - - - Can create floating charge (over inventory) Can create floating charge (over inventory)
Dissolve End whenever w/ or w/o court order w/ or w/o court order Perpetual Perpetual
Voluntary: apply to Registrar → give notice Insolvency - may incl clawback - C can be
If creditors: & Ldn Gazette → dissolve after 3m liquidated, administration, voluntary
Individual arrangement
Voluntary Insolvency - may incl clawback - LLP can be
Arrangement liquidated, administration, voluntary
arrangement
1
,PARTNERS General Partnership Limited Partnership Limited Liability Partnership
Unanimous (all) New P or Change busi nature or Change PK New P or Change busi nature or Change PK New P or Change busi nature or Change PK
Special Ps Any unless PK - all make dxns General - manages and unlimited liability Designated - ≥2 who file initial docs and admin role
Managing - daily
Sleeping - investors Limited - merely investor People w/ Significant Control: >25% control
Manage Equal regardless of contribution unless PK General partner Designated Ps - appoint auditor, submit annual
confirmation statements, file accounts, statutory filing
**All members have equal say unless PK
Profits Equal regardless of initial contribution unless PK Equal unless PK Equal unless PK
Profits not distributed out of Pshp unless ALL P agree
Debts Equal unless PK - creditor can sue any General has unlimited liability to pay losses; Pshp liable for its own debts
Losses Limited liable up to his contribution
Liability If profits in PK unequal then on dissolution, liability Ps liable only up to capital contribution - if all paid then
split in same proportion as profits owe nothing
Agency Yes Yes Yes - LLP will be liable for torts of partners if act is in
1. Actual 1. Actual course of business
2. Apparent - look at P’s conduct in and if RP expects 2. Apparent 1. Actual
P in this txn to have authority and if txn relates to 2. Apparent - look at conduct of LLP
business ***LLP not liable if P acted w/ no authority & 3P knew
they had no authority - same with Pshps
Fiduciary Yes to e/o to BIOPshp Yes Yes
New member Unanimous consent Unanimous consent Unanimous consent → 14 days to inform Registrar of
new Ps or change in designated Ps
How to leave Notice to Ps, direct notice, Ldn Gazette Notice to Ps, direct notice, Ldn Gazette RNotice to Ps & to Registrar w/in 14 days
***Cannot expel unless power in PK
Contribution No From limited partner No
Assign Interest Yes - assigning right to profits Yes - assigning right to profits Sure
**debts/management do not pass unless ALL agree
Remuneration No right to salary unless PK for managing Ps No No
Disclosure Disclose all info that relates to Pshp Disclose all info that relates to Pshp Members entitled to inspect books any time
Must Account: Must Account: Must Account:
- secret profits - secret profits - secret profits
- profits from competing business w/o consent - profits from competing business w/o consent - profits from competing business w/o consent
- if business obtained via Pshp reputation or assets - if business obtained via Pshp reputation/assets - if business obtained via Pshp reputation or assets
Pay back Pshp indemnifies any P who incurs businesses Pshp indemnifies any P who incurs businesses Pshp indemnifies any P who incurs businesses expenses
expenses expenses in conduct of business or to preserve Pshp expenses in conduct of business or to preserve in conduct of business or to preserve Pshp property
incurred property Pshp property
2
, Example of SH distribution: A company issued 1,000 £1 ordinary shares and 2,000 £100 shares with a 5% noncumulative preference. The company approves
distribution of a £100,000 dividend. Preference must be paid before any dividend to ordinary. Company has 2,000 £100 shares with a 5% preference. That
means that each of the 2,000 preference shares is entitled to receive 5% of £100 (ie. £5) before the company may make a distribution to the ordinary
shareholders. So, the first £10,000 (£5 x 2,000 shares) must be distributed to the preference share owners, which leaves £90,000 that may be distributed to the
ordinary shareholders
3
Sole Trader General Pshp Limited Pshp LLP Lmtd Company (private)
Formation Unincorp - Unincorporated - don't Must register - Only exists Must register - Only exists once properly Promoters register, or can buy shelf company
low admin need PK once properly filed and filed and Cert. of Incorpxn issued
costs Cert. of Incorpxn issued Only exists once properly filed and Cert. of
DEFN: >2 persons carrying DEFN: >2 persons carrying on business in Incorpxn issued
on business in common DEFN: >2 persons carrying common with view to profit
with view to profit on business in common Owners = members
with view to profit
Liability Unlimited If P acts in ordinary course General P: ≥1 P must have Partners not liable beyond investment SH not liable beyond investment - no liab if
personal of Pshp business then unlimited personal share paid in full
unlimited personal joint
and several - e/ liable for all Limited P: limited to capital Corporate veil unlikely pierced so look for dif
**PK cannot change contrib liab of D/SH (civil or criminal) - C only formed
to do fraud or avoid existing obligations
If public trading w/o trading cert, D personally
liab for any losses
Manage By the person All unless PK states Only General P ≥2 Designated members file, but all BOD in BIOC, unless insolvent then
members manage equally unless PK BIOCreditors
Can have EEs
Owners = members Owners = members
Transfer Can sell Only transfer w/ unanimous Only transfer w/ unanimous Only transfer w/ unanimous consent SH can transfer
whenever consent consent
File with No No requirement - keep Must file Must file Must file: Accounts; Annual Returns w/in 14
Registrar requirement books at business days of end of 12m period w/ Stmnt of
Capital; if Large - Annual Ds Report & Annual
Strategic Report
Tax ST pays P pays income tax - P taxed P pays income tax - P taxed P pays income tax on his share of profits SH pays income tax on dividends
income tax on their share of profits on their share of profits
even if they’re left in Pshp even if they’re left in Pshp LLP not taxable entity C pays corporation tax
that year that year
Raising $ - - - Can create floating charge (over inventory) Can create floating charge (over inventory)
Dissolve End whenever w/ or w/o court order w/ or w/o court order Perpetual Perpetual
Voluntary: apply to Registrar → give notice Insolvency - may incl clawback - C can be
If creditors: & Ldn Gazette → dissolve after 3m liquidated, administration, voluntary
Individual arrangement
Voluntary Insolvency - may incl clawback - LLP can be
Arrangement liquidated, administration, voluntary
arrangement
1
,PARTNERS General Partnership Limited Partnership Limited Liability Partnership
Unanimous (all) New P or Change busi nature or Change PK New P or Change busi nature or Change PK New P or Change busi nature or Change PK
Special Ps Any unless PK - all make dxns General - manages and unlimited liability Designated - ≥2 who file initial docs and admin role
Managing - daily
Sleeping - investors Limited - merely investor People w/ Significant Control: >25% control
Manage Equal regardless of contribution unless PK General partner Designated Ps - appoint auditor, submit annual
confirmation statements, file accounts, statutory filing
**All members have equal say unless PK
Profits Equal regardless of initial contribution unless PK Equal unless PK Equal unless PK
Profits not distributed out of Pshp unless ALL P agree
Debts Equal unless PK - creditor can sue any General has unlimited liability to pay losses; Pshp liable for its own debts
Losses Limited liable up to his contribution
Liability If profits in PK unequal then on dissolution, liability Ps liable only up to capital contribution - if all paid then
split in same proportion as profits owe nothing
Agency Yes Yes Yes - LLP will be liable for torts of partners if act is in
1. Actual 1. Actual course of business
2. Apparent - look at P’s conduct in and if RP expects 2. Apparent 1. Actual
P in this txn to have authority and if txn relates to 2. Apparent - look at conduct of LLP
business ***LLP not liable if P acted w/ no authority & 3P knew
they had no authority - same with Pshps
Fiduciary Yes to e/o to BIOPshp Yes Yes
New member Unanimous consent Unanimous consent Unanimous consent → 14 days to inform Registrar of
new Ps or change in designated Ps
How to leave Notice to Ps, direct notice, Ldn Gazette Notice to Ps, direct notice, Ldn Gazette RNotice to Ps & to Registrar w/in 14 days
***Cannot expel unless power in PK
Contribution No From limited partner No
Assign Interest Yes - assigning right to profits Yes - assigning right to profits Sure
**debts/management do not pass unless ALL agree
Remuneration No right to salary unless PK for managing Ps No No
Disclosure Disclose all info that relates to Pshp Disclose all info that relates to Pshp Members entitled to inspect books any time
Must Account: Must Account: Must Account:
- secret profits - secret profits - secret profits
- profits from competing business w/o consent - profits from competing business w/o consent - profits from competing business w/o consent
- if business obtained via Pshp reputation or assets - if business obtained via Pshp reputation/assets - if business obtained via Pshp reputation or assets
Pay back Pshp indemnifies any P who incurs businesses Pshp indemnifies any P who incurs businesses Pshp indemnifies any P who incurs businesses expenses
expenses expenses in conduct of business or to preserve Pshp expenses in conduct of business or to preserve in conduct of business or to preserve Pshp property
incurred property Pshp property
2
, Example of SH distribution: A company issued 1,000 £1 ordinary shares and 2,000 £100 shares with a 5% noncumulative preference. The company approves
distribution of a £100,000 dividend. Preference must be paid before any dividend to ordinary. Company has 2,000 £100 shares with a 5% preference. That
means that each of the 2,000 preference shares is entitled to receive 5% of £100 (ie. £5) before the company may make a distribution to the ordinary
shareholders. So, the first £10,000 (£5 x 2,000 shares) must be distributed to the preference share owners, which leaves £90,000 that may be distributed to the
ordinary shareholders
3
