Blp Latest Upadates Revision Notes For Exam Blp Revision Notes New Edition Already Graded A+

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BLP LATEST UPADATES REVISION NOTES FOR EXAM BLP
REVISION NOTES NEW EDITION ALREADY GRADED A+




1. Business Structures

The main structures to distinguish are:

• Sole trader — no separate legal personality; the individual is personally
liable.
• General partnership — governed principally by the Partnership Act 1890;
generally no separate legal personality in England and Wales.
• LLP — separate legal personality with limited liability for members.
• Limited company — separate legal personality; shareholders generally
have limited liability.

Exam point: Always identify legal personality + liability + management +
taxation/formation when comparing structures.

2. Sole Trader

A sole trader owns and operates the business personally.

Key features:

• No separate legal entity.
• Unlimited personal liability.
• Business debts can become personal debts.
• Simple to establish and operate.
• Profits are generally taxed as the individual's income.

Common trap: Limited liability does not apply to a sole trader.

3. General Partnership

Under Partnership Act 1890, s.1, a partnership exists where persons carry on a
business in common with a view to profit.

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Important consequences:

• Partners normally act as agents of the firm and each other.
• Partnership can arise through conduct; a formal written agreement is not
essential.
• Partners may have personal liability for partnership obligations.

Exam trap: Simply sharing profits is not automatically conclusive proof of a
partnership; the entire relationship must be considered.

4. LLP

A limited liability partnership combines characteristics of a partnership with
separate legal personality.

Remember:

• The LLP is a separate legal person.
• Members generally benefit from limited liability.
• It is managed by its members.
• An LLP is particularly useful where participants want partnership-style
flexibility while maintaining limited liability.

5. Limited Company

A company has its own legal personality separate from its members.

This means the company can:

• Own property.
• Enter contracts.
• Sue and be sued.
• Borrow money.
• Employ people.

Core principle: Company debts are generally debts of the company rather than
automatically debts of its shareholders.

6. Separate Legal Personality

The classic principle comes from Salomon v A Salomon & Co Ltd.

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The company is legally distinct from its shareholders.

Exam application: If a shareholder owns 100% of a company, that does not
normally mean the shareholder and company are legally the same person.

7. Limited Liability

Limited liability protects shareholders from automatically being personally
responsible for company debts.

Usually, a shareholder's financial exposure is limited to:

• The amount unpaid on their shares; or
• The amount they have agreed to contribute under the relevant arrangement.

Trap: Limited liability is not an absolute guarantee that directors or shareholders
can never incur personal liability.

8. Company Formation

A private company is incorporated by submitting the required information to
Companies House.

Important constitutional documents/information include:

• Articles of association.
• Statement of incorporation.
• Registered office.
• Details of directors.
• Details of persons with significant control where applicable.
• Share capital information.

High-yield distinction: Incorporation creates the separate legal person.

9. Articles of Association

The articles are the company's internal constitutional rules.

They regulate matters such as:

• Directors' powers.
• Decision-making.

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• Shareholder rights.
• Meetings.
• Share transfers.
• Company administration.

Exam trap: The articles should not be confused with a shareholders' agreement. A
shareholders' agreement is a separate contractual arrangement between
shareholders.

10. Directors' Authority

Directors generally manage the company's business.

A director should ask:

1. Does the company have capacity?
2. Does the director have authority?
3. Is shareholder approval required?
4. Are there statutory restrictions?
5. Does the company's constitution impose additional requirements?

High-yield point: Always distinguish directors' decision-making powers from
matters reserved for shareholders.

11. Directors vs Shareholders

A common BLP issue is determining who must make the decision.

Generally:

• Directors manage the company's business.
• Shareholders exercise powers specifically allocated to them by legislation
or the company's constitution.

Examples may include certain decisions concerning:

• Appointment/removal of directors.
• Alteration of articles.
• Certain share issues.
• Certain transactions requiring member approval.