In English law, “company” is used as an incorporated entity, a whole registered company, while in USA it
may be used for more general ways.
Unincorporated business organizations
Business enterprises can be incorporated, which makes them a legal person, or unincorporated.
There are two types of unincorporated businesses:
- Sole trader: one-man business where owner himself put up the capital for the business. He is
personally liable.
- Partnership
In English Law, partnerships are often referred to a firm. There are no legal rules that govern how a
partnership is set up, but it is often done in a written format such as a deed or articles of partnership.
A partnership is formed by the individual partners, who are either natural or legal persons. Every partner
is an agent of the firm, and can act within the ordinary course of business, to bind the firm and the other
partners for the purpose of partnership.
Partnerships is bound by contract made within the agents actual or apparent authority.
Individual partners pay tax under the income tax system. However, funds can be raised from outsiders
and secure loans. An unincorporated firm is not allowed to borrow money from the public by selling
shares.
Since every partner is an agent, if partner breaches a contract or commits a tort during the firm’s business,
all partners are liable. The individual partners are also liable for the debts. All partners are jointly and
separately liable. Partnership property is a property jointly owned by the partners. Creditors can call upon
the private property if the property is insufficient to meet the debt.
A hybrid form of partnership is the limited partnership (LP), one or more silent partners contribute
capital. Their personal liability is limited to their contribution. In USA, it is called limited liability limited
partnership. All partners will have no liability for most of the obligations.
Limited liability partnerships (LLP) - benefits of LP while retaining the elements of internal structure of a
partnership. The people forming it are the “members”. In USA, the partners are not personally liable for
the malpractice of other partners.
Registered companies
English = company
USA = corporation
There are three types of registered companies:
1. Limited by shares: shareholders are liable for the amount that has not yet been paid for their
shares.
2. Limited by guarantee: shareholders are liable for the amount they have guaranteed to contribute
if the company is wound up (yaralanmış).
, 3. Unlimited: shareholders are liable for the debts of the company if the company is wound up.
The most common form is limited liability companies where the shareholders stop to incur liability to
contribute to the debts of the company once the nominal value of the members shares has been fully
paid.
Three separate pillars are created upon company’s incorporation:
- Company
- Members
- Management
Once registered, the company becomes a legal person. The shares held represent individual interests.
A holding company is required to produce group accounts. The legal recognition of a company’s
independence creates what is often referred to as the “corporate veil”, which separates the company
from its shareholders and protects them from liability for the company action. However, sometimes a
company’s legal personality can be set aside, which is called “lifting”.
Forming a company requires a promoter, who must have contributed some essential element towards
the incorporation.
- Promoter owes fiduciary duties to the company he is promoting; he could not make secret profits
(undertaken by professional agency).
- An incorporated company can be also a promoter (registering the memorandum, articles of
association, enter pre-incorporation contracts)
- The role of the promoter is concluded when the company starts trading.
In England, in order to be incorporated, you need to register two documents. These companies must be
registered at registrar of companies.
1. Memorandum of association (contains the details of initial promoters)
2. Application for registration (name of the company, whether it is a limited liability company or
not, whether it is a private or public limited company, office address) – copy of the proposed
articles
3. Other documents such as statement with the particulars of the company’s first directors,
statement of capital and initial shareholding and a statement of compliance
Close corporation – similar features of a private company
A public company (Plc) – may offers its shares to and borrow money from public.
- It requires a minimum authorized share capital to be incorporated.
- When a public company launches, it is known as a “flotation” (UK) and “initial public offering”
(USA).
- Someone who subscribes is called as “subscriber”.
- If all share capital is not subscribed at the time of IPO, then the underwriter may be liable to take
up unsubscribed shares.
- Public companies on stock exchange are referred as “listed companies” or “quoted companies”.
- Small companies can offer their securities on an intermediate market.
may be used for more general ways.
Unincorporated business organizations
Business enterprises can be incorporated, which makes them a legal person, or unincorporated.
There are two types of unincorporated businesses:
- Sole trader: one-man business where owner himself put up the capital for the business. He is
personally liable.
- Partnership
In English Law, partnerships are often referred to a firm. There are no legal rules that govern how a
partnership is set up, but it is often done in a written format such as a deed or articles of partnership.
A partnership is formed by the individual partners, who are either natural or legal persons. Every partner
is an agent of the firm, and can act within the ordinary course of business, to bind the firm and the other
partners for the purpose of partnership.
Partnerships is bound by contract made within the agents actual or apparent authority.
Individual partners pay tax under the income tax system. However, funds can be raised from outsiders
and secure loans. An unincorporated firm is not allowed to borrow money from the public by selling
shares.
Since every partner is an agent, if partner breaches a contract or commits a tort during the firm’s business,
all partners are liable. The individual partners are also liable for the debts. All partners are jointly and
separately liable. Partnership property is a property jointly owned by the partners. Creditors can call upon
the private property if the property is insufficient to meet the debt.
A hybrid form of partnership is the limited partnership (LP), one or more silent partners contribute
capital. Their personal liability is limited to their contribution. In USA, it is called limited liability limited
partnership. All partners will have no liability for most of the obligations.
Limited liability partnerships (LLP) - benefits of LP while retaining the elements of internal structure of a
partnership. The people forming it are the “members”. In USA, the partners are not personally liable for
the malpractice of other partners.
Registered companies
English = company
USA = corporation
There are three types of registered companies:
1. Limited by shares: shareholders are liable for the amount that has not yet been paid for their
shares.
2. Limited by guarantee: shareholders are liable for the amount they have guaranteed to contribute
if the company is wound up (yaralanmış).
, 3. Unlimited: shareholders are liable for the debts of the company if the company is wound up.
The most common form is limited liability companies where the shareholders stop to incur liability to
contribute to the debts of the company once the nominal value of the members shares has been fully
paid.
Three separate pillars are created upon company’s incorporation:
- Company
- Members
- Management
Once registered, the company becomes a legal person. The shares held represent individual interests.
A holding company is required to produce group accounts. The legal recognition of a company’s
independence creates what is often referred to as the “corporate veil”, which separates the company
from its shareholders and protects them from liability for the company action. However, sometimes a
company’s legal personality can be set aside, which is called “lifting”.
Forming a company requires a promoter, who must have contributed some essential element towards
the incorporation.
- Promoter owes fiduciary duties to the company he is promoting; he could not make secret profits
(undertaken by professional agency).
- An incorporated company can be also a promoter (registering the memorandum, articles of
association, enter pre-incorporation contracts)
- The role of the promoter is concluded when the company starts trading.
In England, in order to be incorporated, you need to register two documents. These companies must be
registered at registrar of companies.
1. Memorandum of association (contains the details of initial promoters)
2. Application for registration (name of the company, whether it is a limited liability company or
not, whether it is a private or public limited company, office address) – copy of the proposed
articles
3. Other documents such as statement with the particulars of the company’s first directors,
statement of capital and initial shareholding and a statement of compliance
Close corporation – similar features of a private company
A public company (Plc) – may offers its shares to and borrow money from public.
- It requires a minimum authorized share capital to be incorporated.
- When a public company launches, it is known as a “flotation” (UK) and “initial public offering”
(USA).
- Someone who subscribes is called as “subscriber”.
- If all share capital is not subscribed at the time of IPO, then the underwriter may be liable to take
up unsubscribed shares.
- Public companies on stock exchange are referred as “listed companies” or “quoted companies”.
- Small companies can offer their securities on an intermediate market.
