Business Law Assignment: Company Formation, Mergers, and Alliances

This business law assignment analyzes various business structures and strategic decisions. It begins by advising on unincorporated and incorporated business models, including their advantages and disadvantages. The assignment then explores Limited Liability Partnerships (LLPs), mergers, and acquisitions, detailing the steps involved, key considerations, and the roles of professionals. Furthermore, it examines strategic alliances and joint ventures, outlining their advantages and disadvantages. The assignment incorporates relevant case law and legal frameworks to provide a comprehensive understanding of business law principles related to company formation, mergers, and collaborative ventures, offering insights into key issues such as shareholder welfare, employee motivation, and the impact of cultural clashes during mergers. The assignment also includes a discussion on how a company should handle an acquisition of a competitor and the significance of treating shareholders equally.

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note

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Question 1
a) Unincorporated organizations are regarded as businesses that does not have any distinct
legal existence from the owners.
Advantages
 Economical and easy to form.
 Minimal requisites for registration.
 Minimal capital.
 Easy dissolution.
 Profits are for proprietor only.
 Simple filing necessities and paperwork.
 Direct control regarding the decisions of the business.
Disadvantages
 Must assume every risk in relation to the business, that is, unlimited liability.
 Shall be responsible regarding the payment of the debts of business.
 There shall be no distinction between the personal assets and the business.
Creditors may seize the private assets.
 Probable tax disadvantages when the profits results in higher tax bracket.
b) Commencing an incorporated business shall have several advantages as well as certain
disadvantages. A business may be incorporated as per the Companies Act of the year
2006. Insolvency Act of the year 1986 may also be considered to be a pertinent statute in
this regard. They are as follows:-

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Advantages
 The liability regarding the shareholders shall be restricted to nominal value in
relation to the shares owned by them, when the company is going to be wound up.
 Much easier to sell the shares.
 Much easier to acquire finance for capital purchases, and much easier to acquire
additional borrowing amenities.
 Provisions relating to pension can be flexible or beneficial regarding an
organization.
Disadvantages
 There may be personal guarantees and liability shall not be restricted in that
matter.
 Formation of the company can be very expensive and also time consuming.
 There shall be huge costs in relation to the accountants.
c) The LLP shall not be considered to be a corporation or a company or a legal body. The
LLP of the United Kingdom is regarded as a ‘Limited Liability Partnership’ that is
considered to be an amalgamation of a classic partnership in relation to a Limited
Liability Company, which is generally established with the help of an LLP Agreement in
a written form, which stipulates in relation to the formation and operations. The LLP
businesses are governed by the Limited Liability Partnerships Act of the year 2000.
The members of an LLP of United Kingdom have a shared obligation as agreed
upon in the ‘LLP agreement’, however, there shall be no separate accountability in
relation to the actions of each other. The members relating to an LLP shall have an
obligation or responsibility of care towards the organization. In case of absolute control

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regarding affairs and management of organization, the members should perform actions
in good faith, the members should not earn secret revenues or profits, the members
should not perform actions that might be in conflict with welfare and interests of the
organization.
d) The most easy and hassle-free ways for acquiring finance in relation to the business are
as follows:-
 Angel investors.
 Business credit cards.
 Crowd funding.
 Business lending.
 Government grants.
 Business overdrafts.
Question 2
a) A merger is considered to be an amalgamation of two entities or more than two entities
for the formation of one specific body. Occasionally, a specific company obtains another
company with the help of purchase, whereas in other instances, the merging companies
pool their assets, resources and interests together. In relation to mergers, no new company
is actually established. The Insolvency Act of the year 1986 regulates the mergers in the
nation of United Kingdom. Even the Companies Act of 2006 is relevant in this regard.
There are primarily three steps in relation to a merger. First, there should be
planning. Second, it shall be the resolution stage, that is, the approval of the management
and the shareholders. Third, implementation shall be the final procedure, which is

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comprising the merger deed enrollment in the register of the company. An important case
in this regard is the case of Re Anglo-Continental Supply Co Ltd [1922] 2 Ch 723.
b) The three kinds of professionals, which are essential during mergers are financial experts,
lawyers and the managers. Advisors form the aforementioned three fields are necessary
during mergers.
c) There are several issues that must be addressed during the merger. In relation to the case
of Bisgood v. Henerson's Transvaal Estates Ltd [1908] 1 Ch 743 and in relation to the
merger between Barclays and the Lehman Brothers, the following issues must be dealt
with:-
 The long-term welfares and interests in relation to the company must be
discussed. It means that the long-term goals and objectives must be decided and
settled by the two merging companies (in the provided situation, the companies of
Bob and Jim).
 A merger generally results in issues relating to the employees of the companies.
Hence, during the merger the impact in relation to the motivation of the
employees must be kept in mind.
 Another key issue or concern during a merger is the loss of expertise. The experts
in the organizations are usually insecure and unsure regarding their position in the
changed and new environment of work.
 The welfare of the shareholders must be kept in mind during the merger.
 During merger if certain quantum of members or employees leave the
organization, then the others are discouraged. Their commitment becomes low
and they become disloyal.

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 Every company enjoys its own culture. Strong culture of both the companies may
result in a clash between the employees of both.
 It must be decided by Bob and Jim as to who shall be the director of the combined
organization.
Question 3
a) When a particular company resolves to take over any other company, it may be referred
to as a takeover or an acquisition. The acquiring company shall give effect to the takeover
by purchasing the majority or by purchasing the totality of the ownership stake or
possession of the establishment or company, which is being acquired (Talreja et. al.
2020).
b) After the acquisition of the company and business of a competitor, the following
significance must be understood by Jim:-
 The shareholders of the companies must be treated in an equal manner.
 The control in relation to the company should lie with the acquiring company.
 The decisions must be made by the management of the acquiring company unless
decided and agreed upon otherwise.
 The directors should be selected from both the merging companies keeping in
mind the welfare and interest of the merged organization.
Question 4
a) A strategic alliance is considered to be an agreement that takes place either between two
or parties or between more than two parties in order to pursue and follow a series of

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required objectives and goals, which have been agreed upon, while remaining
autonomous or independent organizations.
Advantages
 The risk is shared.
 The knowledge is shared.
 There are opportunities for development and growth.
 Low costs.
 Having access in relation to target markets as well as resources.
 Outcome of innovative ideas.
 Diversification.
Disadvantages
 The resources has to be shared.
 The strategic alliance partner may become a competitor in future.
 There may be a possibility of uneven alliance.
b) A joint venture is considered to be a business establishment, which is formed by either
two parties or more than two parties, usually characterized by joint risks and returns,
shared governance and shared ownership. A joint venture of UK takes the form of a
corporation, or partnership, or LLP or an unincorporated agreement (Lonsdale and Lucas
2019).
Advantages
 Access to distribution networks.
 Admittance to new markets.
 Increased capacity.

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 Shared liability.
 Access to finance, technology and expertise.
Disadvantages
 Objectives regarding the venture may be unclear.
 Communication skills and leadership may be absent in partners.
References
Bisgood v. Henerson's Transvaal Estates Ltd [1908] 1 Ch 743.
Companies Act, 2006.
Insolvency Act, 1986.
Limited Liability Partnerships Act, 2000.
Lonsdale, J. and Lucas, C., 2019. The Influence of Key Performance Indicators on relationship
and performance of joint venture construction projects In The UK.
Re Anglo-Continental Supply Co Ltd [1922] 2 Ch 723.
Talreja, S., Mirani, S.H., Oureshi, J.A.A. and Ahmed, F., 2020. Do pre & post merger integration
matters in cross border merger & acquisition (cbm&a). Studies of Applied Economics, 38(2).