Assignment on Legal Aspects of a Business

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Legal Aspects of Business
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1...........................................................................................................................................1Main features of Limited liability partnership........................................................................1TASK 2............................................................................................................................................3Duties of director....................................................................................................................3a. Duties of director to act within power (section 171)..........................................................4b. Duties of director to promote the success of company (section 172).................................6CONCLUSION...............................................................................................................................7REFERENCES................................................................................................................................8
INTRODUCTIONLegal aspects mean the legal rules, regulation and legislation which need to be abided byan enterprise from the time of its incorporation till the time of its dissolution. The mainlegislation an enterprise need to comply is Company's Act, 2006. This act lays down all theregulation a business need to abide by for its formation and carrying out its organisational. Thedirectors of an organisation are bestowed with certain liabilities and obligations along with sonrights. The law regulates the use of power and enforcement of those obligations to endure fairuse and application. In the present report certain aspects of the company-law is discussed. Thefirst aspect is related with the limited liability partnership. Another aspect defines duties ofdirectors as outlined under company's act.TASK 1Main features of Limited liability partnershipLimited liability partnership is A separate legal entity which works in accordance withthe law. The UK law has given this kind of business enterprise an unlimited capacity. It islegalized to regulate full range of commercial business activities and enter in to agreement. Inyear 1890, partnership act was introduced for governance and regulation of partnership ventures(Barbu and et.al., 2014). This act is useful for individuals who desire to create partnership forpurpose of doing commercial activities. However, this act was not applicable to limited liabilitypartnership but certain provision of Partnership Act 1890 may be relevant and applied to theseventures. Further, LLP is significantly a general partnership in form, with one central difference,instead of a general partnership where individuals are liable for partnership’s liabilities debts andobligations (Hossain, 2013). The LLP act 2000 has been developed within 18 chapters. Thisventure usually protects its individual’s partners against personal liability for same specificpartnership liabilities. Below given are some essential characteristics of LLP.Corporate entity: As per legal provision under section 1(2), these types of venturesusually become a body corporate after incorporation. Company also possess a separatelegal personality from its members and it has its own rights and liabilities separate fromthat of its members. As specified in case “Salomon v Salomon & Co Ltd”, House of lordsstated that company by duly incorporated and it is independent person with its rights andliabilities appropriate to itself(Liu and Skerratt, 2018). Thus, legal contract of corporateveil between company and its owners was firmly created by this case.1
Incorporation: In order to create a limited liability partnership, there is requirement of 2persons. In order to become legal individual, usually members of business enterprise arerequired to mention their name in document of incorporation (Lennox and Li,2012Schwarcz, 2014). This documents will contain all important and necessaryinformation about LLP. However, declaration of compliance that it satisfies requirementsof LLP act 2000 must be sent to registrar. After receiving document, registrar will issuecertificate of incorporation. These important partnership ventures have been formulatedby parties for maximizing profitability. Amount of share capital which is required forregulation of business operations are also shared by partners and ventures. Theseimportant units need to be follow all the legal aspects which are stated by government inthe companies act 1950. Incorporation of these ventures can also be cancelled byregistrar if some circumstances.Membership: It is also considered as legal requirement that first members needs to signdocument of incorporation. This will enable the company to undertake new partnersthrough legal agreement with existing partners(Barker, 2016). However, members ofbusiness enterprise can also decide rights and obligations of members through a mutualconsent and agreement. In some circumstances, if members are not able to agree on rightsand duties, then partnership will have been governed by LLP regulation 2001.Name: It is also considered as important feature of this partnership that its name isrequired to be mentioned in the document of incorporation. It is necessary that name ofthese types of venture should end with “LLP”. All other relevant information likecompany name, address, membership information and article of association is need to beprovided by members to registrar for incorporation.Taxation: According to section 10, trade, business or a profession which is carried on bythe limited liability partnership through its members (Kemp, 2014). Major effect of thissection is to ensure that members of these ventures are get taxed on the basis of profitthey have earned, which is also considered as similar in the law of partnership. However,even though the members of venture enjoy Limited liability benefits, the laws also protectthem with the regards to taxation (Truyens and Van Eecke, 2014). It is stated thatmembers in the organization will be taxed on the profits which are arising out for theaccounting period ending during the relevant tax year. For these venture with the2
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