Chapter 9 Key facts checklists

Chapter 9 Key facts checklists

Company law I: trading structures and forming the business
  • It is important to recognize the distinct features between the five main forms of business organization (sole trader, simple partnership, limited liability partnership, private limited company, and public limited company).
  • Sole trader organizations are very flexible but expose the owner to unlimited liability for losses, whilst operating a limited company limits potential losses of the shareholders but is subject to external regulation.
  • There is no legal distinction between an individual trading as a sole trader and his/her business, but a limited company possesses its own legal personality irrespective of the members/directors who carry out its functions.
  • A partnership can be ‘simple’, ‘limited’, or a ‘limited liability partnership’.
  • While partners generally have the right to participate in the management of the firm, shareholders of a limited company are not automatically allowed to take a part in its management.
  • Private limited companies are not required to have a minimum share capital but public limited companies require a minimum of £50,000 allotted share capital on registration.
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