Nature, Formation and Management of Business Organizations in the UK

BSc (Hons) Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organisations in the UK
Contents
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Introduction
Business organization is an entity formed for the purpose of carrying an economical
and commercial activities which is governed by the law and statutory regulations
where the business is situated. There are two types of organization one is the non
profit organization where the main aim to serve the society and other one is the
profit organizations where the main aim is to satisfy its customers and earn profit.
There are different types of organization such as sole proprietorship, partnership
and limited liabilities partnership. The choice of organization depends on the
businessman and the purpose for which it is formed.(Beatty, Samuelson, and Abril,
2022). In this particular report an analysis of a UK based company is done which
includes the formation and law compliance in the UK for business and organization,
different types of organizations based on legal structures, in the last a
recommendation about the most suitable legal structure which is best for the
business.
Businesses & Organizations in the UK
A company is a separate legal entity distinct from its members who formed it, it is an
artificial legal person which is capable of undertaking or acquire any property in its
own name,it can sue and being sued, perpetual succession and limited liability of its
members towards the debt of the company. The management includes its owners
which are the shareholders and the directors who manages the company affairs.
These individual are responsible for conducting meeting to pass any decision with
the consent of all the members of the company. The directors are responsible for
managing the different transaction of the business which means dealing with
different members and their issues and various other transactions with the outsiders
as company being an artificial person cannot perform on its own so it manages the
various company affairs through directors. In case where there is any negligence
arises due to mismanagement which results into financial looses to for which the
company became liable for all the the debts and liability arises as the liability of the
company is of its own it cannot impose it on any other members.(Chaffey,
Edmundson-Bird, and Hemphill, 2019)
Directors is responsible for managing and controlling the affairs of the company they
are responsible for decisions, direct actions towards goals to achieve profitability and
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to protect interest of the shareholders they are very crucial for the success of the
organization .They act as agent, employee, officers and trustees of the company.
The rights of the directors include inspection of books of accounts, to receive notices
of board meetings, to vote and participate in board meetings, to inspect the board
meeting minute books and many other rights. The liabilities of directors comply with
SEBI guidelines,managing excess and refunds of application money, be held
accountable if the majority consent on something these are some of the liabilities of
directors.(Chinmulgund, and Tapas, 2020)
Partnership is the association of two or more person where they agreed to share the
profit of the business which is carried on by all or any of them. It is created with
mutual agreement between the partners with a particular purpose. The termination of
the partnership can happen due to many reasons as such voluntary dissolution by
the partners, completion of the purpose for which it is being formed, termination on
the order of the court, resignation by any partner by giving a written notice to all
other partners,in case of death and insolvency these are all the causes of the
termination of the partnership.
A company is a legal entity separate from its members so it have documents that
shows the scope, objectives,rules and management of the company. Memorandum
of association is an document that regulates the external functioning of the company
defining the clauses regarding name,capital,liability,object,situation of an
organisation. Article of association are the internal rules and regulations of a
company known as the constitution of company. These are the essential document
for the proper functioning of the company as they are the internal rules and
regulations which is required for internal management of company.(Hu, Cui, and
Aulakh, 2019).
The legal business structure of UK companies
Sole Trader
It is a type of business form where a single person owned and run the whole
business he solely is responsible for all the liabilities of the business entity, he is the
only owner of the business and have unlimited liability .It is one of the easy business
structure to established in terms of compliance, registration process.
ADVANTAGES
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