Key Sources of Laws for Business Organizations in the UK

This report analyzes the legal context for business organizations in the UK, including the key sources of laws. It explains the nature and management of a firm through identifying different types of laws and some elements such as termination of partnership – MOA and AOA. Then the crucial elements of the report file starts that tells about the different types of legal business structures in UK. The different types of legal structure involved in the report are – sole proprietorship, general partnership, partnership and limited liability.

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
Submitted by:
Name:
ID:
Contents
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Table of Contents
Introduction ...............................................................................................................................3
Businesses & Organizations in the UK : .....................................................................................3
The legal business structure of UK companies :........................................................................4
Sole Trader :...........................................................................................................................4
General Partnership :.............................................................................................................5
Conclusion..................................................................................................................................8
References .................................................................................................................................9
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Introduction
Business law, can also be said a commercial law or mercantile law is a
subject that tells about the legislatures of the government that has an impact on the
business environment or on a particular type of industry. It is comprised of all the
agreements and policies of national or even global level that depends on the area of
presence of a company (Nickerson and Sahu, 2020). These policies are needed to
be followed by a business entity to maintain a good reputation and avoid legal
circumstances. The following report is based on analyzing a part of business law.
The file starts with the explanation about businesses and organizations of UK by
scanning the country's business environment including different elements. In this, it
explains the nature and management of a firm through identifying different types of
laws and some elements such as termination of partnership – MOA and AOA. Then
the crucial elements of the report file starts that tells about the different types of legal
business structures in UK. The different types of legal structure involved in the report
are – sole proprietorship, general partnership, partnership and limited liability. At last
of the report there is the recommendation on the type of legal structure that can be
sued by IMO solutions.
Businesses & Organizations in the UK :
One of the primary legislation of the United Kingdom which takes care of the affairs
of different businesses is the Companies Act of 2006. For the purpose of smooth
functioning and its continuity the said companies also need to abide by the others
piece of legislations such as the Contract and Employment laws. The every business
involves certain activities which are related with the engagement of employees and
employers which are mainly governed by the employment laws. Other than this on
every step, one is required to enter into certain agreements and transactions which
comes under the ambit of contract law of the country. Both theses aspects are very
important to taken care of along with the business activities such as the workforce of
the company is an major aspect which aids in the success of the company.
Moreover, there lies certain duties, rights and obligations on the part of each
concerned individual to which one needs to comply with in order to escape from the
adverse consequences (Banerjee and Homroy, 2018). The companies which are
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operated within the territory of the country are entitled to certain benefits and titles
such as one being of separate legal entity where both the company and its members
subjected to be treated in an individual capacity. The other is of the status of
perpetual succession where the existence of the company does not comes in the
question with the death or termination of any member. Moreover, the provisions of
companies act also states the process of registration and dissolution of a company.
Other than this the acts also states the duties and responsibilities of the directors or
the people of top management. The directors are said to be responsible for their acts
which are done while acting outside their given authorities. Also if there stands a
case where the directors are at fault due to act of negligence or of occurrence of any
criminal offense then in that case individual will stand solely liable for his respective
acts as there stands no such concept of joint liability for such acts. The affairs of the
companies are carried out under the guidance of two major documents which are
Article of association and Memorandum of association which bare also addressed as
the constitution of the company. The signature of the concerned partners at the time
of incorporation of the company on the these documents is a mandatory requirement
for them to have a legal validity attached to them. The said documents comprises of
all the minute details which are related to the company such as its registered office,
name of its partners, amount of total share capital, the ratios in which the profit and
losses are to be incurred, etc. moreover, other than the companies act, the
legislation which particularly governs the conduct and affairs of the partnership firms
is the Partnership Act of 1890.
The legal business structure of UK companies :
Sole Trader :
This type of legal structure is also known as sole proprietorship. In this, a
business entity is established by a single individual that is its owner. It is the most
commonly found type of legal structure that is being followed in different parts of the
country mostly small and rural areas due its most simple process of establishment.
The single individual that handles the management and own the company is known
as its proprietor or owner (N’Guessan and Hartarska, 2021). The owner / proprietor
has all the responsibilities of the operations that are being practiced in the
surroundings of its business entity or in its relation. There is a single identity of the
company and owner. He / she has all the rights to enjoy all the profits that are made
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by the firm after deducting the expenditures and also has all the responsibility to bear
the amount of losses in case the enterprise faces any. Least number of legalities are
required in establishing and managing this. The legal implications that apply on this
legal structure is the practice of regularly paying of taxes and maintenance of the
basic information of its customers to follow general data protection regulation. The
registration of this is not necessary and the taxes are based on the amount of
income of the owner. The sole proprietorship can be dissolved with the preference of
the owner without much legal formalities. Generally these business enterprises work
on small scale and raise their capital through taking informal loans or using own
funds. There can be different types of advantages and disadvantages of sole trade
which are mentioned in the below points :
Advantages :
 The owner does not need permissions and advice of other people for making
changes in the operations / techniques / methods or function of the business
and implementing any strategy or new way in the business process. This
decrease the time need in implementing changes and make the business
flexible to change.
 The investment need for establishment is low (Fayed, Elshoura and
Mosallam, 2021).
Disadvantages :
 The unlimited liability comes with a huge risk to the company that is one of the
bigge4st disadvantage of it.
 In absence of the owner, the operations and productivity get weak due to the
absence of responsibility of any other individual.
General Partnership :
This is a type of legal structure in which two or more individuals come
together or collaborates to form a business entity with the motive of building profits.
The involved individuals are known as partners. Another way of getting the
investment in this type is by taking loans from certain authorized or unauthorized
agencies and some other informal loans from friends or family members. Whatever
the amount of investments and the force of managing, the profits and losses are
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divided into equal parts in case of issues or legal involvement. The responsibility of
managing the operations is also equal. Generally these of business firms are not
registered with the governmental bodies that work on related roles. The partners /
owners share similar identity with the company and are liable to unlimited liability and
even selling of their personal assets at the time of losses. These can be dissolved
based on the preference of the owners (Xing and Zhu, 2021). The legal implications
imply on this legal structure is the paying of taxes on the income of the owner as the
identity of the owner and company is similar and the profits / losses are divided into
equal ratios in case of any conflicts that leads to the involvement of governmental
bodies. There can different types of advantages and disadvantages of general
partnership. These are mentioned in the following points :
Advantages :
 The level of risk is decreased due to the involvement of more than one
individuals.
 The ideas can be shared from different people and can be chosen according
to the benefit of the company due to the involvement and authorities of other
people. The responsibilities also gets divided which decrease the pressure
from a single individual.
Disadvantages :
 The absence of much formalities form a disadvantage as it provides with the
risk to the security of the firm.
 The involvement of different individuals can lead to conflicts due to the
difference in ideas and management methods of different people.
Partnership :
In this type of legal structure, two or more than two people (maximum people
involved in authority can be 50) collaborates together to form a business entity with
the motive of building profits. The included people contribute their resources that be
monetary or non monetary as investment for gaining multiple returns through them.
This needs detailed agreement between the partners that involve all the important
information such as – ratio of sharing profits and losses. The agreement involved in
this is known as partnership deed. The owners have unlimited liability and have to
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use their personal assets in case of losses. The corresponding advantages and
disadvantages of partnership are as follows :
Advantage :
 The partnership deed involves the proper dividation of the authority and
responsibilities which help in simplifying the process and dividing work in
different individuals.
Disadvantage :
 The operations become rigid and need permissions of involved people for
making changes (Drobyazko and et. al., 2019).
Limited Liability :
This type of legal structure basically tells about the limited liability of the
involved people as specified by its name which provide no risk to their personal
assets. It is the mix of partnership and corporate companies due to involvement of
features of both the legal structures. The identity of the partners are different form
the identity of the company. The taxes are needed to be filled twice, one as company
and one form the income of the owners or directors. Mostly these legal structures are
formed when a innovative idea is used as motive of the company that also involves
risk with it. Its advantages and disadvantage are :
Advantage :
 No risk to personal assets (Kolahi, 2021).
Disadvantage :
 The need of high amount of documentation
Recommendations for IOM Solutions :
IOM solutions is a company dealing in electrical parts with the ownership of
Sam. He wants to fulfill the increasing demands of the market and is feeling
pressured from the business operations. He also want to perform business with
security to risks. Recommending a legal structure that can be adopted by him in his
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company to share the pressure and fill the demand of the market and must also
involve less risks is – partnership. Through partnership he can involve 1-2 individuals
that can help him in managing the operations of the company with full responsibility
which will lead to lowering the pressure. This can also decrease the elements of risk
to personal assets by sharing the ratio of loss.
Conclusion
From the above report it has been concluded that the business law is complex
topic that is made up of all the legalities and regulation of the government on national
or international basis according to the presence and dealing of the company. The
business environment of United Kingdom is vast that involve different types of legal
structures business entities and business form in it. The country business
environment has a strong hold over the global market which comes with the
opportunity for the companies to trade worldwide. Legal structure is the type of
business structure that forms the way of sharing of information, different ownership
and has governmental policies formed accordingly. Some of these legal structures
are – sole trader, general partnership, partnership and limited liability. A legal
structure should be adopted by a company through considering many different
elements such as its motive, demanded level of authority and investments needed in
establishment.
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References
Nickerson, C. and Sahu, S., 2020. CSR, Cluster Groups and Stakeholder
Engagement in the Indian Context: Towards Sustainable Governance Structures.
In Business Clusters (pp. 170-192). Routledge India.
Banerjee, S. and Homroy, S., 2018. Managerial incentives and strategic choices of
firms with different ownership structures. Journal of Corporate Finance. 48. pp.314-
330.
N’Guessan, M.N. and Hartarska, V., 2021. Funding for BOP in emerging markets:
organizational forms and capital structures of microfinance institutions. Research in
International Business and Finance. 58. p.101511.
Fayed, A.M.S., Elshoura, S.M.Y. and Mosallam, R.A., 2021. Governance structures
and practices in for‐profit and not‐for profit hospitals in Egypt. The International
Journal of Health Planning and Management.
Xing, W. and Zhu, L., 2021. A functional approach to reassessing the legal status
and navigational rights of ships and ship-shaped structures. Transport Policy, 106,
pp.120-130.
Drobyazko, S. and et. al., 2019. Ethical, technological and patent aspects of
technology blockchain distribution. Journal of Legal, Ethical and Regulatory
Issues. 22. pp.1-6.
Kolahi, M., 2021. Administrative organizational structures towards environmental
Macro-Policies. Quarterly Journal of the Macro and Strate-gic Policies. 8(3). pp.510-
534.
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