Nature, formation and management of Business Organisations

Nature, formation and
management of Business
Organisations

Contents
INTRODUCTION...........................................................................................................................1
Business and Organizations in UK..................................................................................................1
The legal business structure of UK companies................................................................................2
Recommendations for IOM Solutions:............................................................................................5
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business organisation refers to an entity where the activities takes place for some
commercial purpose. A business organisation is established by one or more individuals with the
aim of earning profits or revenue. Every organisation has its own management which look after
the working of the business (O'Dwyer and Gilmore, 2018). Management is the art of assembling
people together in an organisation and work effectively to achieve the goals and objectives which
the company aspires. The business of IOM Solutions is being run by Sam, a sole trader. IOM
Solutions sell electrical parts to garages situated locally. Demand for products and the need of
employees both increased over the past two years. This make Sam change its organisational
structure of sole trader. In this report, the working of various business organisations in UK is
being discussed. Further, various legal business structures of UK companies are also explained in
brief along the recommendations in context to which structure should IOM Solutions adopt.
Business and Organizations in UK
The Companies Act, 2006 (CA 2006), is applicable to the working of business
organisations in UK. It is the prime source of law under which companies in UK are being
incorporated and registered (Behl and Et. Al., 2022). In addition to it, Insolvency Act 1986 also
governs the working of the business organisation. Corporate law could be classified in two
streams, corporate finance and corporate governance. The prime role of corporate governance is
to mediate the duties as well as rights of the employees, shareholders, creditors, etc. (Ewing,
Men and O’Neil, 2019). the Act gives board of directors the powers to mange the business of the
company. The law in UK is quite beneficial for the shareholders. It enables them to vote
individually in the general meetings.
The funds of the company are raised either by issuing shares or through debt or both.
Companies have a significant place in private law because of the unique characteristics. Separate
legal entity, perpetual succession, common seal, etc. are some of the characteristics inherited by
the company (Darics and Koller, 2018). A sole trader complies with the rules and obligations of
the general law while a partnership firm needs to follow Partnership Act 1890. generally, people
prefer to form a company in order to limit their liability.
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