BMP4002 Business Law: Analyzing the UK Legal Context for Business

This report provides an overview of the legal context for business organizations in the UK, focusing on the Companies Act 2006 and various business structures such as sole proprietorships, general partnerships, and limited liability companies. It details the legal obligations, advantages, and disadvantages of each structure, including the roles and responsibilities of directors, vicarious liability, and the importance of adhering to labor laws. The report also discusses the significance of the Memorandum of Association (MOA) and Articles of Association (AOA) in governing company operations. It concludes with a recommendation for IOM Solutions to consider a limited liability company structure for expansion, citing its benefits in terms of management and security. The document refers to legislation such as the Partnership Act 1890 and GDPR.

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 ...............................................................................................................................2
Businesses & Organizations in the UK........................................................................................2
The legal business structure of UK companies..........................................................................3
Sole Trader:............................................................................................................................3
General Partnership:.............................................................................................................4
Partnership:...........................................................................................................................5
Limited Liability:.....................................................................................................................5
Recommendations for IOM Solutions........................................................................................6
Conclusion..................................................................................................................................6
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Introduction
A company engages in a variety of functions which may be professional, industrial or
commercial. The management of the company primarily work to make a profit. These types
of businesses can be run as small, medium-large companies of some sort. They can range
from sole proprietorships, businesses to multinationals. Their business is often based on the
production of goods for sale, so different strategies are needed to reach their objectives.
These companies are also bound by the different rules arising from the legal obligations
which are imposed by the government (Fenwick and Wrbka, 2018). Different types of
strategies are developed by them in order to expand their business which not only assist in
increasing the profits for owners and shareholders and enjoy the competitive advantage. The
Companies Act is a type of law that regulates organisation, and also includes detailed
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provisions on how a company is formed and operated over a long period of time. This report
details Sam's recommendations for various types of organisational structures, their strengths
and weaknesses, the role of directors in the firm, legal obligations, and the appropriate
organizational form.
Businesses & Organizations in the UK
UK trading companies act is related to the Companies Act 2006. It is very important for the
management of the company to follow the labour laws so that their workers do not suffer.
Company have a separate legal identity that is why company also known as artificial personal
(Kubasek, et.al, 2019). Due to their corporate nature, they have various identities, eternal
existence, separate ownership, a mutual seal, and the right and responsibility to sue or be
sued. Commercial transactions of UK companies include non-disclosure agreements, buying
and selling of shares or assets, agreements, and more.Companies are also restricted by
vicarious liability, which states that managers are liable to others for torts committed by its
employees. The company may also be responsible for organizational negligence if it fails to
meet 's obligations according to the standard required. A director is basically the person who
is liable for the proper operation of the company and has many obligations to carry out, as
well as the obligations associated with his position.
The owner of the company is responsible for taking the decision because all the power are in
hands of them and all decision are made by them for the success of the firm. If the director
plays don not perform the assigned responsibilities properly then may be held accountable
with the aid of using the opposite administrators or with the aid of using shareholders. They
may be requested to make amends for the loss which the employer suffers due to him, their
settlement also can be completed, they also can be banned from their post, staff also can be
made any action towards him for any critical breach and they also can be requested to go
back the residences of the employer if some responsibilities are possess by them. The
partnership in a employer may be finished with the aid of using the Partnership act 1890.
While running Memorandum of Association(MOA) and Articles of Association(AOA) is
essential. This govern how the employer is made and operated. The MOA is a lawful
announcement that's contracted on the time of establishment of a firm with the aid of using
shareholders or any guarantors whoever is worried while AOA is a written announcement of
all of the policies and guidelines with the aid of using which the employer could be worked
that are agreed with the aid of using the administrators and shareholders of the firm.
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The legal business structure of UK companies
Sam has been in the IOM Solutions business for eight years, is self-employed as a
sole proprietor, operates independently and can be held responsible for any business
responsibilities (Graw, et.al, 2019). He is the only decision maker, so there is no essential to
share profits. Now he wants to grow his organization by selling electrical components and
earn more from the growing number of clients and their demands. He has different
possibilities for the right industry and is looking for recommendations. These are: -
Sole Trader:
Self-employed individuals are often referred to as single dealers. This is being
considered as the easiest business structure because it is easy to open, set up and operate. The
owner only enjoys the beneficiary of income from the company's profits. As the sole manager
and owner, they are only liable for all responsibilities that arise in the company. Therefore,
this is very popular among British companies because ownership management is done on the
one hand. It's so easy to set up that it doesn't cost anything to set up. Business is much
simpler than other options. The disadvantage is that owner have to bear all the debt by
themselves. Taking a vacation can be hard and sometimes impossible, and all day-to-day
business obligations must be handled by the owner himself. This type also has its drawbacks,
as all material and equipment costs are borne by one person. Banking and financial risk are
also included in this type.
Legal implications of this type are: Owners of this type of business must occasionally pay
income and corporate tax on all firm income. They must register in compliance with the
General Data Protection Regulation. That is, retains the customer's data registration. These
regulations have penalties if someone does not comply with them. In addition, the law
requires you to join social security (Kushare, Kabra and Ghotekar, 2019). It is very important
for the owner to making timely self-assessments, by this they can avoid the legal
consequences
General Partnership:
General partnership includes two or more people, who cooperate and business account
for business to get some interests. This type of business is considered to be one of the most
common shapes. This is someone who is commissioned by numbers. In addition, the amount
of people involved in important decision-making is examined as a partner and acts as a total
of consumers. Generally, some form of partnership is the general partnership is the most
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common. In a conversation on the formation of this form of partnership, it is very lightweight
and may be more expensive compared to others. Here, all named partners are responsible for
the risk of the company, comprises of equally shared debt and profits. In addition, individual
partners have an equal obligation to provide the company with work, skills, investments and
assets (Cappellino, 2020). Like other forms of partnership, it has more benefits than
disadvantages. It can be assumed that the profit sharing goes directly to the partners and they
are responsible for the same amount.
Now, speaking of the legal meaning of this type, according to the regulations specified,
the partnership company is considered as its owner, not a separate legal entity. This means
owner and the company have different legal status. Therefore, all associates are responsible
for paying a portion of their income, instead of paying tax on the entire revenue generated as
a result of their cooperation.
Partnership:
A partnership is a teamwork between two or more people who agree to share the
company's interests and debts. To form a partnership, it must consist of three elements: That
is, an agreement is required between the partners, which must be made in connection with the
sharing of the profits earned. The organization can be jointly run by all partners or by one of
the single partners on behalf of the other partners. In addition, this type of business has many
strengths and weaknesses, and it has its strengths. It includes a number of partners, providing
an extensive network for the enterprise (Xiao, Feng and Wang, 2019). At the same time, this
can be a disadvantage. This is because the large circles tend to give partners direct and
complete control over their business.
For speaking approximately its creation, it calls for a intentional association
companions to begin an enterprise. Also, a partnership deed is a fundamental prerequisite
which shape and governs all the affairs of the enterprise along with the need of earnings as
well. It may be founded in both of the manners as written or oral.
Limited Liability:
This form of business, the liability of the nominated associates is restricted to the
amount of shares they have acquired. Generally, it is the that form of organization that is
considered a small business and can’t be listed. The advantage is that both the organization
and its owner enjoy the position of a separate legal entity, there is less capital requirement for
the establishment of the company, and the owner of the company enjoys the benefits of
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limited liability (Robison, 2021). The disadvantage is that the quantity of shareholders
compulsory should not exceed 50. Another major disadvantage is the inability to publish
prospectuses to the general public.
Also, because both the partner and the company enjoy the status of a separate legal entity, the
firm takes full responsibility, but the partner's liability is restricted to the number of shares
invested by each. The partner shall not be liable personally for any debt owed to the firm
unless it is fraudulent on the portion of the partners. They cannot liable for the actions of
others against negligence or fraud, just as there is no such concept of collective liability in the
case of limited liability transactions(Surahyo, 2018).
Recommendations for IOM Solutions
After getting a complete knowledge of the different types of starting or expanding a
commercial, the most suitable form of organisation for Sam is a limited liability company. He
has clearly specified that he wants to increase his business, called IOM Solutions, and despite
many opportunities he is left behind due to insufficient management as he is the only
individual to manage the company's operations. Also, Sam is looking for a secure business
option while expanding his firm, so this option is a good choice for him.
Conclusion
From the above record it may be concluded that the organizations Act of 2006 performs
a very vital function in phrases of organizations and their control along with each minute
info. Along with the system of its creation, the obligations of its companions and their
percentage of profits. Further the report additionally concluded the diverse varieties of
commercial enterprise which might be to be had at the choice of any character who desires to
begin a brand new or amplify the prevailing commercial enterprise along with all their
offense implication, blessings and drawbacks. This report also concluded that the quality
alternative that is to be had withinside the palms of Sam, that allows them to amplify his
commercial enterprise of IOM answers is of restricted legal responsibility partnership.
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References
Fenwick, M. and Wrbka, S., 2018. International business law: emerging fields of regulation.
Bloomsbury Publishing.
Kubasek, N.K.,et.al., 2019. Dynamic business law: The essentials (pp. 28-50). McGraw-Hill
Education.
Graw, S.,et.al., 2019. Understanding business law. LexisNexis Butterworths.
Kushare, V.N., Kabra, P.S. and Ghotekar, D.S., 2019. Research Article on Forms of Business
Organization.
Cappellino, A., 2020. How to Choose the Right Business Organization Form.
Xiao, X., Feng, J. and Wang, X., 2019, October. Research on business organization model
and management mechanism innovation of territorial energy enterprises. In 4th International
Conference on Modern Management, Education Technology and Social Science (MMETSS
2019) (pp. 703-706). Atlantis Press.
Robison, L., 2021. Alternative Forms of Business Organizations. Financial Management for
Small Businesses, 2nd OER Edition.
Surahyo, A., 2018. Forms of Construction Organizations. In Understanding Construction
Contracts (pp. 29-34). Springer, Cham.
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