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Legal Aspects of Business - Report

   

Added on  2020-07-23

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LEGAL ASPECTS OFBUSINESS1

Table of ContentsTask 1..............................................................................................................................................3Introduction.................................................................................................................................3Critical discuss the main feature of unlimited partnership and private limited companies .......3Advantage and disadvantage of unlimited partnership...............................................................4Advantage and disadvantage of private limited companies .......................................................4Conclusion ......................................................................................................................................5TASK 2............................................................................................................................................6INTRODUCTION...........................................................................................................................6Duty to the act within the power (section 171 Companies Act 2006)........................................6Duty to promote the success of the company (section 172 Companies Act 2006).....................7Duty to the exercise independent judgement (section 173 Companies Act 2006).....................7CONCLUSION................................................................................................................................8REFERENCE ................................................................................................................................102

Task 1IntroductionThere are different forms of business organisation that are a partnership, soleproprietorship and corporation. An unlimited partnership is an arrangement through which twoor more persons agree to share in all assets, profit and financial and legal liabilities of a business.In unlimited partnership company, all partners have unlimited liability which means that all theirpersonal assets are liable for the partnership’s obligation (Warner and Sullivan, 2017). On theother side, a private limited company is a help privately and liability of owner is limited. Alongwith this, their number of members should not exceed more than 50. The present task will coverthe main features of an unlimited partnership and private limited companies. Apart from this,advantage and disadvantage of private limited will be explained. Critical discuss the main feature of unlimited partnership and private limited companies An unlimited partnership provides a relatively simple way for two or more people withrespect to own and manage the firm together. General duties under companies act 2006, toaccomplish success of the firm for benefits company members (Perkman and Schildt, 2015).Along with this, the director should avoid conflicts of interest within the firm Under this businesseach partner their skills, capital and time. There are some key features of unlimited partnershipthat are as follows:The share of risk and rewards: In unlimited partnership, all the profit and risk are sharedequally. As no individual is liable for particular risk when it occurs within the firm (Kitching, J.,Kašperová and Collis, 2015). As all partners contribute to business so they are liable for eachactivity carried out by the firm. The share of profit: Each partner is liable to share the net profits which are earned by thefirm. Along with this, a contract needs to be provided for equal shares and it is also depended onthe investment done by partners within the firm (Holloway and Parmigiani, 2016). Liability, without limit: While working in partnership, all the partners are responsible forall the debts and obligation of the business without any limitation. It also includes all thedamages which take place due to wrongful act and omissions of other partners. A private company is that company which is help privately and it has a separate legalentity. Under this shareholder cannot trade publicly shares. No shares can be sold out with3

permission of shareholders (Gutierrez, Boukrami and Lumsden, 2015). In private limitedcompany, there are maximum 2 directors appointed and they do not need to appoint byindependent directors. Liability is held by an individual as the total amount of shares which areheld by the firm (Albers, Wohlgezogen and Zajac, 2016). Contrasting partnership, there will beno risk on the assets of a shareholder and they do not need to may more amount as compared tothe value of shares they hold. It is essential for the private limited company to use the worldprivate limited after their firm name. Advantage and disadvantage of unlimited partnershipThere are many sole traders who are forming private limited firms every day in order toprotect themselves against from trading in ever-changing economic climate. There are somelimitation and benefit of general partnership firms that are as follows:A general partnership has no separate legal existence which is different from its partner.Contrasting to this, a private limited company it does not need to be registered at or make regularfilings to the firm house which can hold keep things simple (Alcácer, Cantwell and Piscitello,2016). All the profit earned by the firm is shared equally between business partners. One of themain advantages is that they do not need to pay tax. Along with this, each partner registers theirprofit and loss of the firm on their own personal income tax return (Hardgrove, McDowell andRootham, 2015). There are chances that assets can be raised by partners if there are more thantwo partners. Along with this management can be improved with there is more than 1 owner. Onthe other side, some of its disadvantages are that if risk or damage takes place due to one partnermistake then other partners also bear losses. A partner cannot transfer their interest in the firmwithout the common agreement of all the partners (Mouraviev and Kakabadse, 2016). Alldecisions are made by partners and all the issues are solved which are faced by company.However, disagreement is one of the common problem in partnership case it is so because onemay not agree with other partner ideas for carrying out the business.Advantage and disadvantage of private limited companies In private limited companies, there is a restriction to transfer the shares to another person.further private limited company can easily establish by two members and all daily activities arecarried out by the directors (Warner and Sullivan, 2017). The advantage of the private limitedcompany is that members know the way to handle each other and the way of controlling owner’scapital. There is a number of directors in private limited firm is maximum 2 and it needs to be4

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