Law for Accounting: Company Formation, Contractual Agreement, Intellectual Property, Employment Legislation

AWARDS FOR TRAINING AND HIGHER EDUCATION (ATHE)
Unit R/617/6922: Law for Accounting
Course Project:
Task1: Report for partner advising Jodie Hart on company formation, contractual agreement,
intellectual property, employment legislation.
Task 2: Report for partner advising Dayloan Ltd on issues relating to insolvency, malpractice,
fraud, bribery, money laundering, computer misuse and cyber crime
Words Count: 13801

CONTENTS
Task 1 (a).................................................................................................................................6
Task 1 (a) section (i) Company Formation ..........................................................................7
Task 1 (a) Section (ii) Financing a Company .......................................................................8
Shares Issued at a Premium:............................................................................................9
Shares with Pre-Emption Rights:......................................................................................9
Task 1 (a) Section (iii) Administration of Company:.............................................................9
1) Director: .......................................................................................................................9
Task 1 (a) Section (iv) Removal of Company Director.......................................................12
2) Company Secretary....................................................................................................12
3) Other Officers of the Company:..................................................................................12
Task 1 (a) Section (v) Advantages for Jodie of running a business as a registered
company include:................................................................................................................12
Task 1 (a) Section (vi) The Disadvantages for Jodie running a business as a registered
company include:................................................................................................................13
Task 1 (a) Section (vii) Veil of Incorporation.......................................................................13
Case Law:.......................................................................................................................14
Corporate body...............................................................................................................14
Limitation of partner liability.............................................................................................14
Taxation of LLP...............................................................................................................14
Advantages over limited company..................................................................................15
Task 1 (a) Section (ix) Shareholders..................................................................................15
Task 1 (a) Section (x) Transfer shares in a UK company...................................................15
Task 1 (a) Section (xi) Analysis of Capital Maintenance ...................................................15
Reduction of Capital .......................................................................................................16
Example of Capital Reduction ........................................................................................16
TASK 1 (B) ANALYSIS OF THE ELEMENTS AND NATURE OF CONTRACTUAL
AGREEMENT ........................................................................................................................17
Task 1 (b) Section (i) Requirement of Data Protection Legislation ....................................20
Task 1 (b) Section (ii)The purpose of the GDPR ...............................................................21
Task 1 (b) Section (iii) Penalties for Non-Compliance. UK General Data Protection
Regulation (UK GDPR) ......................................................................................................21
Fines for infringement of the UK GDPR .........................................................................21
Task 1 (b) Section (iv) Impact of non-compliance of GDPR...............................................23
TASK 1 (C) INTELLECTUAL PROPERTY ............................................................................23
Section (i) Protecting Intellectual Property.........................................................................24

Copyright.........................................................................................................................24
Registration of Jodie's training material..........................................................................24
Enforcement of copy right...............................................................................................24
Civil Actions.....................................................................................................................24
Importance of training material for Jodie:........................................................................25
TASK 1 (D) TORT LAW ........................................................................................................26
Section (i) Introduction .......................................................................................................26
Issue of liability under tort law.........................................................................................26
Case law Donoghue v Stevenson...................................................................................26
Section (ii) Vicarious liability...............................................................................................27
Case law ........................................................................................................................27
Section (iii) Remedies available to injured person..............................................................28
Section (iv) Negligence and breach of the duty on the part of Jodie..................................28
My opinion. .....................................................................................................................28
Section (v) Employee and employment .............................................................................28
Section (vi) Assessment of impact of legislation relating to employment are as follows: . .28
Statutory responsibilities of Jodie ...................................................................................30
Health & Safety ..............................................................................................................30
Employees Welfare ........................................................................................................30
Discrimination..................................................................................................................30
Pay & Benefits ................................................................................................................31
Employees’ Responsibilities: ..........................................................................................31
Issues of employee's dismissal ......................................................................................31
I) Wrongful dismissal (the common law route) ...............................................................32
ii) Unfair Dismissal (the statutory route) .........................................................................32
Case law ........................................................................................................................32
Justification for Dismissal................................................................................................32
iii) Remedies for Unfair Dismissal...................................................................................34
TASK 2 SECTION 1: THE PROCESS OF INSOLVENCY ....................................................35
What is insolvency? ...........................................................................................................35
Corporate insolvency: ........................................................................................................35
Cash-flow test: ...................................................................................................................35
Balance sheet test: ............................................................................................................35
Law for Insolvency: ............................................................................................................35
a) Administration:............................................................................................................35
b) Company Voluntary Arrangement (CVA): ..................................................................36

c) Liquidation: .................................................................................................................36
Section 2: Advice for Dayloan Ltd .........................................................................................36
Winding up Petition ............................................................................................................38
Winding Up Order ..............................................................................................................38
Official Receiver Appointed ...............................................................................................38
Dayloan Ltd assets are sold ..............................................................................................38
Dissolution of Dayloan .......................................................................................................38
Section 3: Fixed Charges: .....................................................................................................38
Floating Charge .................................................................................................................39
Section 4: Common HMRC Enforcement Methods of Debt Collection:.................................39
Debt Collecting Agencies:...................................................................................................39
Taking Control of Goods: ...................................................................................................39
Direct Recovery of Debts: ..................................................................................................39
Accelerated Payment Notice: ............................................................................................39
Winding Up/Bankruptcy Petition: .......................................................................................40
VAT Bond: .........................................................................................................................40
Section 5: Good Lending Practices .......................................................................................40
Section 6: Poor Lending Practice ..........................................................................................41
My opinion: .....................................................................................................................41
Section 7: Explanation of elements and consequences of malpractice, fraud and bribery....41
My Opinion: ....................................................................................................................42
ii) Fraud: .............................................................................................................................42
iii) Bribery ...........................................................................................................................43
My Opinion: ....................................................................................................................44
My Opinion: ....................................................................................................................44
Section 8. Money Laundering: ...............................................................................................47
My Opinion:.....................................................................................................................48
Section 9. Computer misuse: ................................................................................................49
Relevant Case Law: ...........................................................................................................49
The act makes the following illegal: ...................................................................................50
Unauthorised access to computer material: ......................................................................50
Unauthorised modification of data: ....................................................................................50
Section 10. Cybercrime: ........................................................................................................50
Cyber-Dependent Crimes: .................................................................................................51
Cyber-Enabled Crimes:.....................................................................................................51
Recent examples of Cybercrime ........................................................................................51

Section 11: ............................................................................................................................52
Corporate governance (CG): .............................................................................................52
Organisation for Economic Co-operation and Development (OECD): ..............................52
Purpose of Corporate Governance.....................................................................................52
Risks of Non-Compliance in Corporate Governance: ........................................................52
My opinion: .....................................................................................................................54
Section 12. ............................................................................................................................56
Selflessness: ......................................................................................................................56
Integrity:..............................................................................................................................56
Objectivity:..........................................................................................................................56
Accountability:.....................................................................................................................56
Openness:..........................................................................................................................57
Honesty:..............................................................................................................................57
Leadership:.........................................................................................................................57
Public Service: ...................................................................................................................57
Respect: .............................................................................................................................57
Reference...............................................................................................................................58

The purpose of my report is to advise Jodie Hart on different aspects of trading as a limited
company, contractual agreement, intellectual property and employment legislation.
 Jodie Hart is trying to decide whether to form a limited company for her new training business.
 Given the assumption that the business was recently launched, it is assumed that in the near
future, it will be a small and medium size enterprise (SME).
TASK 1 (A)
In my capacity as an advisor, I will advise Jodie Hart on different aspects of trading as a limited
company in the following aspects:
 Process of company formation
 Financing requirments
 Administration
 Directors
 Sectretary
 Other officers of the company
 Role of shareholders
 Charectrictics and advantages of trading as a limited company
 Limited liability
 Separate entity
 Tax Efficiency
o Dividend
o Pension
 Professional status
 Name protection
 Capital maintenance requirement
 Veil of Incorporation
Company Law Considerations
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Jodie Hart’s company must follow companies Act 2006 to comply with company law. The detailed
requirements of the company law (affecting different aspects of limited company) that she must
consider are as follows:
Task 1 (a) section (i) Company Formation
Jodie has to submit the IN01 Form-This form is prescribed by Companies House, in order to register as
a new company. It includes the company’s name, company type, principal business activities, address
of the registered office, particulars of the directors and secretary(s) of the company (if any). It also
includes details of share capital, people with significant control (PSCs) and whether and election has
been made to keep information on the public register, these requirements are supplemented by
regulations which include for example,
 The details requirements for the form and content of financial statement.
 Choose an available name on the Companies House register.
 Decide who she wants to nominate as director.
 Directors’ salary must be reported in profit and loss account.
 Decide how many shares and to whom she wants to issue them to in order to raise the finance.
 Where Jodie wants to register the company (her registered company and business addresses
could be the same).
Following exemptions will be available to SME in respect of reporting.
 Jodie’s new company will be classified as a ‘small’ company, if it has any 2 of the following
characteristics:
a) Having turnover of less than £10.20 million.
b) Balance sheet is not more than £5.1 million.
c) No more than 50 employees.
 Jodie’s company accounts will be prepared in accordance with the provisions applicable to the
small companies’ regime and in accordance with the provisions of FRS 102 Section 1A-Small
Entities.
 Micro-entities are very small companies. Jodie’s company will be a micro-entity, if it has any 2
of the following:
a) Having annual turnover of £632,00 or less.
b) Balance sheet is no more than £316,000.
c) No more than 10 employees.
 Jodie’s company accounts will be prepared in accordance with the micro-entity provisions of
the Companies Act 2006 and FRS 106, the FRS applicable to the micro-entities regime.
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 Section 477 of the Companies Act 2006 allows Jodie company to be expect from audit.
My recommendation. In the short term her company accounts will be prepared under the provision
of micro-entity. In future, if the annual turnover increases above £632,000, but remains under £10.2
million, then the accounts will be prepared under the provision of small company.
 Jodie will have to get an audit if her company’s articles of association say she must, or her
company shareholders ask for it.
Task 1 (a) Section (ii) Financing a Company
Jodie is advised that a limited company can raise funds by shares issue to an external party by asking
them to complete form SH01 and send them to Companies House. Then Jodie needs to take the
following steps:
 Update the register of members and register of allotments.
 Include the allotments in the company’s next confirmation statement.
 Show the new shares issued within the company’s accounts.
Jodie can also use her personal savings and introduce it as a share capital to start the business. Banks
provide a ready external source of finance for limited companies. However, if the company is newly
registered and the directors do not have any previous experience of running a company, they will need
a security against the loan. Jodie can also provide “personal guarantee” if required, with a consequence
of putting her personal assets to a risk.
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