Business Law Report: UK Business Organizations, Structures, and Laws

This report, prepared for a Business Law module (BMP4002), provides an in-depth analysis of the legal context for business organizations in the UK. It begins by defining business and its regulatory framework, emphasizing key legislation such as the Insolvency Act 1986 and the Companies Act 2006. The report then outlines various business structures prevalent in the UK, including sole traders, general partnerships, limited liability partnerships, and limited liability companies, detailing their characteristics, advantages, and disadvantages. It discusses the legal aspects of each structure, such as the Companies Act 2006, which governs company operations, and the Partnership Act 1890, which regulates partnerships. The report also covers the concepts of vicarious liability, negligence, and the roles of directors and managers. Finally, the report offers a recommendation for IOM Solutions, suggesting the adoption of a limited liability company structure to facilitate growth and access to finance. The report concludes by summarizing the key findings and emphasizing the importance of selecting the appropriate business structure to comply with UK law. This assignment is available on Desklib, a platform offering AI-based study tools for students.

Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organisations in the UK
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Table of Contents
Introduction:...............................................................................................................................3
Main Body..................................................................................................................................3
Businesses & Organisations in the UK........................................................................................3
The legal business structure of UK companies..........................................................................4
Sole Trader........................................................................................................................4
General Partnership..........................................................................................................5
Limited liability Partnership..............................................................................................5
Limited Liability company.................................................................................................6
Recommendations for IOM Solutions........................................................................................6
Conclusion..................................................................................................................................7
References:.................................................................................................................................8
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Introduction:
The business is the process through which the one person offers somethings and the
other person accepts it in the exchange of consideration. The business is mainly done to earn
the profit in the market. There are various laws that regulates the operations of the business.
These laws are called as the business law. These laws are mandatory to be followed by every
businessman of the country. The two main business law are the Insolvency Act, 1986 and
the Companies Act, 2006(Adamou, Kyriakidou and Connolly, 2021). These acts provides for
the provisions for the operation of the business in the market. It explains about what is legal
or illegal in the as per the law of the country. The insolvency act explains about the
conditions where an individual can be taken as insolvent in the eyes of the law. This report
explain about the various business systems that are applicable in the United Kingdom. This
report explains about the various types of businesses such as the general partnership, sole
proprietor, limited liability company, etc. It also explains about the merits and demerits of
these type of businesses. This report also explains about the recommendation to the selected
company to opt which type of business that would increase the growth of the company.
Main Body
Businesses & Organisations in the UK
The Companies Act, 2006 regulates the operations of the company in the country. The
company has its unique and separate legal entity as per the law of the country. The company
can be sued in the courts of the country. The company enjoys the perpetual succession. This
means that the company would survive irrespective of the addition or the removal of the
shareholders of the company. This also requires that there must held the general meeting at
least once in the year. Moreover, the company is handled by the Board of Directors. The
BOD takes all the top level decisions for the company. It also requires that the company must
fulfil all the provisions of the companies act. The vicarious liability is the liability of the
master for the acts that are being committed by the servant. It is basically the master servant
relationship of the manger and the employees of the company. This means that the manager is
held accountable for the acts that are being committed by the employees of the
company(Berry, 2021).
The term negligence means the neglect of doing the duties of the management. This
means the non complying with the duties. This negligence can occur in businesses also where
the management does not comply with its duties while operating the business of the
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company. For instance, the negligence that is committed by the doctors are liable for the
compensation to the aggrieved party as per the law of the country. The director is the person
who has the sole control over the businesses of the organisation. The director is the
chairperson of the company. The director takes all the top level decisions by consulting it
with the other members such as shareholders of the company. Moreover, the director must
always remain loyal towards the company. This is because all the shareholders of the
company trusts on the director that he would do best for the company. The another reason for
this is that the profit and the growth of the company is dependent on the actions of the
director of the company. The manager is also responsible to see that there is not
discrimination happening in the country. The manager must do sure that there lies harmony in
the company among the worker of the organisation. Furthermore, if the director is held liable
for any malpractices done by him in the organisation, than he should be disqualified from
the post of the director of the establishment(Gullifer, 2021).
The law that governs the business of partnership is the Partnership Act, 1890. the
partnership is the type of business which requires minimum two partners in it. The partners
are held liable for the acts of the business. The partnership act provides for the establishment
and the closure of the partnership firm. It also explains about the various laws related to the
operations of the business. The partnership firm can also be closed when the partners decides
to do so as per the law of the country. But, it is required that such partners must give notice to
the partnership firm regarding their non continuance in the partnership firm. There are two
main documents for the company as per the Companies Act, 2006. these two documents
includes the AOA and MOA. The Article of Association provides for the rules and
regulations for the day to day operations of the company. The AOA comes after the MOA of
the company. The Memorandum of Association is the supreme document of the company.
The MOA provides the basic guidelines and structure to the company. This is mainly concern
about the long term goals of the company. The AOA deals with the rules that are applicable
on each and every employee of the institution(Imhimmed, 2020).
The legal business structure of UK companies
Sole Trader
The sole proprietor is a type of business under which there is only one owner of the
business. Such a type of business would require that all the job responsibilities is to be taken
by that one person only. Such person handles all the operations of the firm such as marketing,
financing, selling, manufacturing, etc. the sole proprietor is beneficial because it would
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provide for the high level of confidentiality. There is high risk of unlimited liability in this
type of business. It also requires high concentration on work by the sole proprietor in order to
develop the business. The sole proprietor can frame its own rules for the firm. The sole
proprietor can take its own decisions without even taking consent from any other person for
the firm. The tax liability is also very cost effectual in this case. The sole proprietor also
enjoys the total profit of the firm. This is because there is no one who would share the profit
of the firm. On the other hand, the sole proprietor is wholly responsible for financing the
funds for the firm(Masoodeen and Mazahir, 2019).
General Partnership
The partnership firm is the firm which requires the minimum number of two
individuals for its establishment. The partnership firm initiates when two individuals decides
to carry on the business in the market. There is no mandatory requirement to register the
partnership firm. The partners are wholly liable for all the acts that are being done under the
name of the partnership firm. It also requires that both the partners should share the unlimited
liability for the partnership firm. The partnership firm is being regulated by the Partnership
Act, 1890. Moreover, it is very easy to formulate the partnership firm. The profits and the
losses of the firm is being shared by the partnership firm. It would also not burden to one
individual as in the case of the sole proprietor. It also accommodates in decision making for
the firm. The partners would enjoy more in their personal and social life as they have more
time now. The disadvantage includes the lack of confidentiality in the business
organization(Padia and Callaghan, 2020).
Limited liability Partnership
This is the other kind of partnership which is limited liability partnership according to
the laws of the UK. The primary part of devising a limited partnership organization is that it
should have a registered office in the country. The partners are controlled for their liability
towards the organization. These kinds of partnership is very important as other partners are is
conjugated for the wrongful acts that is being committed by the other partner in the firm. This
is because of its main element of the limited liability in the firm. The taxation is too cost
effective. The owners have to pay separately tax on the earnings earned by the partnership
firm. The advantages includes the controlled liability, interdependence of administration,etc.
The loopholes includes the lack of concealment and time consuming decision devising in the
business cocern. But the decisions are effective as it is taken by a long process by the consent
of all the partners of the firm.
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Limited Liability company
The administration of the establishment is ruled by the Companies Act, 2006.The
company should be firstly incorporated in the authorized authority in the country. There is
detached legal entity for a institution. The company too has limited liability. It is also called
as the private limited company. The chairman of the company is called as director. When
there are many owners of the institution, then it is known as the Board of Directors. The
institution has to pay tax individually. The company in order to get funds issues its share
capital in the market. The people who pays in the stock of the establishment are called as
stockholder of the institution. The institution has various benefits and loopholes. The merit is
that it is more cost-efficient as number of worker are hired in it. The institution faces very
lack of fiscal crisis as the stockholder invest in the respective company. It has very effectual
in managing the tax for the company. It also aid in making vast earnings for the institution. It
also furnish the extra time for private lives of the board member of company. The
disadvantages includes the less of decision devising quality to a single person in the
company(Spotorno, 2018).
Recommendations for IOM Solutions
The IOM Solutions should opt for the Limited liability company. The main reason
behind this is that it would provide the IOM Solutions the better chance to grow and expand
in the market. The IOM Solutions require finance in order to grow, which would be easily
accessible by this type of company. The need for the urgent capital would by fulfilled by the
limited liability company. The company would be able to employ more persons in order
increase its manufacture and sell in the selected market. Moreover, the limited liability would
also ensure that no extra financial burden would be on the head of Sam. This would also
release Sam for his personal life as the other persons in the company would manage the work
of the organisation. It would further require less certification for the company as per the law
of the country. This would too help the Sam from giving time more in business concern
organization and increasing extra profits in the organisation. It would too help Sam in
administration of the establishment as presently Sam can hire more worker for the
institution(Ramage, 2020).
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Conclusion
This report concludes about the kinds of organization that could be operated in UK.
The report sum-up about the various types of business organization such as sole proprietor,
partnership, limited liability company along with the general partnership in United Kingdom.
The laws that regulate these business organizations are Companies Act 2006 and Partnership
Act, 1986. It also different provisions that deals with the administration of these kinds of the
business as specified by the law of the state. It also summaries about the merits of different
kinds of business concern. Moreover, the Sam is advised to change over his organization
into Limited Liability Company because of the different benefits that suits to the selected
firm.
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References:
Books and Journals
Adamou, M., Kyriakidou, N. and Connolly, J., 2021. Evolution of public-private partnership:
the UK perspective through a case study approach. International Journal of
Organizational Analysis.
Berry, E., 2021. Partnership Law: Used, Misused or Abused?. European Business Law
Review, 32(2).
Gullifer, L., 2021. The Financing of Micro-Businesses in the UK: The Current Position and
the Way Forward. The financing of micro-businesses in the UK: the current position
and the way forward (in N. Orkun Akseli & John Linarelli, The Future of
Commercial Law: Ways Forward for Change and Reform, Hart 2020), University of
Cambridge Faculty of Law Research Paper, (17).
Imhimmed, A., 2020. To What Extent Does Legal Capital Requirement Provide a Sufficient
Protection to The Creditors: anExamination the Situation in the UK and the EU
Member States.
Masoodeen, M.L.Z. and Mazahir, S.M.M., 2019. Is the element of sharing profits among the
partners necessary to establish a partnership?-a comparative analysis between
common law partnership and the Shari’ah law.
Padia, N. and Callaghan, C.W., 2020. Executive director remuneration and company
performance: panel evidence from South Africa for the years following King
III. Personnel Review.
Ramage, S.S., 2020. The European Company Statute and the United Kingdom. Current
Criminal Law, 13(1).
Spotorno, A.R., 2018. Piercing the corporate veil in the UK: The never-ending mess. Business
Law Review, 39(4).
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