Flexibility in EU Law: A Study of Article 267 and 288

Business law

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1 ..............................................................................................................................................3
Suitability of Limited liability company for start up of business................................................3
Task 2...............................................................................................................................................5
Duties of employer as per Equality Act 2010 for the prevention of expensive claims...............5
Task 3...............................................................................................................................................7
Explanation and significance of Article 267 and 288 of TFEU..................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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INTRODUCTION
Business law is developed for assurance of fair operations in commercial industries. This
law is part of civil legislation, guidelines are provided by British legislation which is mandatory
to be complied by business entities (Clarkson, 2010). Present study will be completed in three
parts. In first part, description will be provided regarding pros and cons of partnership and
company in order to select suitable form of start up of business. In second part of the study,
duties and responsibilities of employer will be discussed in accordance with the Equality Act
2010. Last part of the report deals with the explanation of importance of Article 267 and 288 of
TFEU.
TASK 1
Suitability of Limited liability company for start up of business
Limited liability company can be termed as private limited company which have distinct
identity from its members. This form of corporate structure provides both flexibility of
partnership structure and clause of limited liability of company. It is suitable form for start up of
business because it mitigates following disadvantages of the partnership firms:
 Unlimited liability- In form of partnership structure, partners have unlimited liability
towards the debt obligation of the outsiders. Due to this aspect, partners have to pay
business obligations from their personal property in situation where business assets are
not sufficient for the payment (Gale, 2007). Through structure of Limited liability
company, members are secured from the provision of unlimited liability. Thus, they will
not be personally liable for any financial obligation of the business.
 Excessive tax payment- Partnership firms are required to pay tax @40% on their profits
whether the amount is drawn or not drawn by the partners. On the other hand, small
corporate entities are required to pay tax @20%. In addition to this, directors are entitled
to take salary and dividends in order to make reduction in the amount of profits. If
directors aims to take lower salary and make higher investment in the firm, then limited
companies may offer better financial advantages (Miller and Cross, 2012). This option is
not available in the case of partnership firms.
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 Sell of stake and ownership rights- In partnership firms, sell of right of ownership is
quite complicated as it requires permission of remaining partners. Furthermore, parties
are not interested for the investment because they will be personally liable for the action
of business. On the other hand, Limited liability company are in position to issue various
class of shares by which members can easily transfer their shares to the third party
without the permission of members.
 Distinct identity- Partners do not have different legal identity from their business.
Partnership business and partners are considered as single entity for the purpose of
administration of taxes. By considering this fact, with the retirement or death of any party
can lead to the dissolution of business (Limited company or partnership: which is best,
2005). Limited liability company has separate legal entity due to which existence of
organization do not affected by the incapacity of members.
 Difficulty in funding- Partnership organizations generally face difficulty in generation of
funds for the business because they have to provide security of personal or business
assets. However, this issue does not arise in case of Limited liability company. It is
because; members have option for debt and equity issue without providing security. In
addition to this, amount will be borrowed on the name of company due to which there
will not be personal obligation for the members.
 Infringement of name- Partnership structure does not provide protection from
infringement of business name. Due to this aspect, members are not able to claim
damages if anyone copies their name to run similar business. In the case of company,
name is registered with the Companies House and no other organization is entitled for
using resembling or similar name (Broady-Preston and Williams, 2004). With this factor,
members of Limited liability company can create separate market image for their
business.
 Succession- Clause of succession or transfer of ownership rights is complicated in case
of partnership business. It is because; there are various restrictions on the transfer of
ownership and along with this transfer can affect the controlling structure. However, in
case of Limited liability company if shareholder wishes to retire then they have direct
option to sell their holdings to the nominated party.
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