Contents. Table of Statutes. Table of Secondary Legislation. Table of Cases. Glossary. Formation of Partnerships. Relations Between Partners

Transcription

1 Contents Table of Statutes Table of Secondary Legislation Table of Cases Glossary Chapter 1: Business Media 1.1 Introduction 1.2 Partnerships, limited liability partnerships and companies compared Personality Formation and regulation Liability for debts Perpetual succession Ownership of assets Capital requirements Management and agency 1.3 Summary Chapter 2: Nature of Partnership 2.1 Introduction 2.2 Definition of partnership 2.3 A business 2.4 Carried on in common 2.5 By two or more persons 2.6 Carried on with a view of profit 2.7 Summary Chapter 3: Formation of Partnerships 3.1 Introduction 3.2 Commencement of partnership 3.3 Variation of terms of partnership 3.4 Capacity 3.5 Illegal purpose 3.6 Number of partners 3.7 Discrimination 3.8 Legal status 3.9 Partnership name 3.10 Duration and dissolution of partnership 3.11 Summary Chapter 4: Relations Between Partners 4.1 Introduction 4.2 Fiduciary and contractual duties of partners Duty to render accounts Duty to account for private profits Duty not to compete with the firm i

2 4.2.4 Contractual extension of duties of a fiduciary nature 4.3 The working relationship Management Decision making Capital and profits Interest on capital and advances to the firm Partnership books Indemnity Summary 4.4 The relationship of joint ownership 4.5 Post-partnership relationship Assignments of partnership shares 4.6 Summary Chapter 5: Partners Relations with Outsiders 5.1 Introduction 5.2 Liability for the debts of the business 5.3 Relationship between the authority of a partner and partnership decision making 5.4 Liability of apparent partners holding out 5.5 Liability for wrongful acts and omissions and for misapplication of money or property of a third party 5.6 Summary Chapter 6: Dissolution of Partnerships 6.1 Introduction 6.2 Statutory dissolution mechanisms Automatic dissolution Dissolution by the court 6.3 Dissolution by other events Charge of share of partnership property Dissolution by expiration of term or statutory notice Express provisions relating to termination 6.4 Other terms relating to dissolution Goodwill Restraint of trade clauses Expulsion 6.5 Management of dissolution Introduction Statutory provisions to regulate dissolution Public notification of dissolution Continuing authority of partners for purpose of winding up Retiring or deceased partner s share as debt Outgoing partner s right to share in profits made after dissolution Right of partners as to application of partnership property Contractual terms to manage retirement 6.6 Dissolution and the distribution of assets 6.7 Bankruptcy and the partnership 6.8 Summary ii

3 Chapter 7: Taxation Income Tax 7.1 Introduction 7.2 The tax year, and calculating taxable income Self-employed individuals: some particular issues Employees and office-holders: some particular issues 7.3 Calculating taxable income Reliefs that reduce taxable income Income tax loss relief for the self-employed Personal pensions tax relief Personal allowance and personal savings allowance 7.4 Dividend allowance 7.5 New property and trading income allowances deferred 7.6 Time for payment of income tax 7.7 Order in which income is taxed The savings income The dividend income 7.8 Summary Chapter 8: Taxation Capital Taxes 8.1 Introduction 8.2 Capital gains tax Calculating the chargeable capital gain The basic equation Exemptions which reduce the basic gain Reliefs which operate to defer payment of capital gains tax Other significant reliefs Rates of capital gains tax and calculating the tax Disposal of shares on buy-back by company Capital gains tax in context 8.3 Inheritance tax Rates of tax a worked example Reducing the liability for inheritance tax reliefs and exemptions Reliefs and exemptions on lifetime transfers Reliefs and exemptions for both lifetime transfers and transfers on death Inheritance tax: residence nil rate band (RNRB) Other inheritance tax issues The relationship between inheritance tax and capital gains tax on gifts Payment by instalments Close companies 8.4 Summary Chapter 9: Taxation VAT and Stamp Duty 9.1 Introduction 9.2 Value added tax 9.3 Stamp duty and stamp duty land tax 9.4 Stamp duty reserve tax 9.5 Summary iii

4 Chapter 10: Forming a Company 10.1 Introduction 10.2 Taking instructions Tailor-made or shelf? Types of company 10.3 Steps leading to incorporation 10.4 Documents required for registration Objects Liability 10.5 The Memorandum of Association Subscribers Share capital 10.6 Articles of Association Name Model Articles of Association Shareholders agreement Directors power to allot shares Statutory pre-emption rights Lien Calls Communications to members Directors Rotation Directors borrowing powers Alternate directors Directors interests in contracts Redemption and purchase of shares Transfer of shares Removal of director Other provisions Subscribers 10.7 IN01 Application to register a company 10.8 Certificate of incorporation 10.9 The first board meeting Pre-incorporation contracts Names Requirements for the use of a business name Passing off Summary Chapter 11: Corporate Decision Making 11.1 Introduction 11.2 Types of company meeting 11.3 Outline of the decision-making processes 11.4 Proceedings of directors meetings Introduction Constitutional provisions relating to directors meetings Calling directors meetings Regulation of proceedings Quorum for directors meetings Decision making Resolving disputes in directors meetings iv

5 Directors written resolutions Minutes of board meetings Conduct of directors meetings 11.5 Decision making by shareholders General meetings Conduct of general meetings 11.6 Summary Chapter 12: Directors, Officers and Auditors 12.1 Introduction 12.2 Division of powers within a company 12.3 Number of directors 12.4 Appointment of directors Subsequent appointments Corporate directors 12.5 Disqualification of directors Grounds for disqualification Undischarged bankrupt Contravention of a DDO 12.6 Termination of office Automatic termination Removal Compensation 12.7 Alternate directors 12.8 Shadow directors 12.9 Directors powers Delegation of directors powers Managing director Directors duties Fiduciary duties Duties of care and skill Statutory duties Duties to shareholders Duties to third parties Relief from liability Statutory provisions concerning directors Directors interests in contracts, transactions and arrangements Directors service contracts Substantial property transactions Loans and guarantees Other statutory provisions The company secretary Appointment and removal Powers and duties Liability for acts Avoidance of acts dual capacity Change of directors or secretary Auditors Powers and duties Liability Qualification v

6 Appointment and removal Resignation Summary Chapter 13: Members, Meetings and Disputes 13.1 Introduction 13.2 Membership of a company Eligibility 13.3 Register of members Notice of trusts excluded Rectification 13.4 Powers of members 13.5 Duties of members 13.6 General meetings 13.7 Members resolutions 13.8 Convening general meetings Statutory provisions 13.9 Notice of general meetings Length of notice Contents Service Special notice Proceedings of general meetings Quorum Proxies Corporate representatives Chair Voting rights Chair s casting vote Adjournment Minutes of general meetings Dispensing with formalities Written resolutions Internal disputes and minority protection Removal of directors Enforcement of personal membership rights Actions by the company the rule in Foss v Harbottle Exceptions to Foss v Harbottle Reflective loss claims Actions by members Procedure Derivative actions under the Companies Act Unfair prejudice Powers of the court likely orders/outcomes of a successful petition Just and equitable winding up Summary Chapter 14: Altering the Constitution 14.1 Introduction 14.2 Change of name Enforced change of name vi

7 14.3 Alteration of objects Procedure 14.4 Registered office 14.5 Alteration of capital 14.6 Re-registration 14.7 Alteration of articles Procedure Limitations Shareholders agreements Entrenchment 14.8 Written resolutions of private companies 14.9 Summary Chapter 15: Share Capital Raising Finance and Shares 15.1 Introduction 15.2 Nature of shares Share rights 15.3 Classification of shares Variation of class rights 15.4 Allotment Partly paid shares Discount Share premium Returns 15.5 Transfer and transmission Transfer Transmission Lost share certificate 15.6 Financial services 15.7 Summary Chapter 16: Share Capital Maintenance, Redemption and Reduction 16.1 Introduction 16.2 Distributions Procedure Tax consequences 16.3 Purchase of own shares General prohibition Penalties for breach Redemption or buy-back? Power of company to purchase its own shares Conditions for purchase Financing the purchase of shares Use of capital Tax consequences Summary 16.4 Reduction of capital authorised by court Procedure 16.5 Reduction of capital by the solvency statement procedure 16.6 Summary vii

8 viii Chapter 17: Borrowing 17.1 Introduction 17.2 The power to borrow 17.3 Security for borrowing company charges Types of charge over company properties Weaknesses of a floating charge 17.4 Priority of charges 17.5 Registration of charges 17.6 Register of charges 17.7 Other forms of registration 17.8 Steps for execution of a charge 17.9 Steps for the prudent lender who requires security Discharge of charges Enforcement of security Recovery of borrowing from a company Receivership Administration Guarantees Tax considerations Summary Chapter 18: Publication of Information 18.1 Introduction 18.2 Company searches 18.3 Official notification 18.4 Confirmation statement 18.5 Accounts Publication Form and content Exemptions for small and medium-sized companies Information about directors benefits: remuneration Directors liability with regard to the accounts 18.6 Penalties for failure to make returns 18.7 Statutory registers 18.8 Prescribed forms 18.9 Business stationery Electronic communications General provisions relating to electronic communications Documents and information sent by the company Documents and information sent to the company Companies details on websites and in electronic communications Summary Chapter 19: Corporation Tax 19.1 Introduction 19.2 Calculation of corporation tax Rate of corporation tax Basis of assessment Losses 19.3 Close companies

9 19.4 Distributions Taxing distributions Distributions by close companies 19.5 Tax avoidance 19.6 Summary Chapter 20: Limited Liability Partnerships 20.1 Introduction 20.2 The benefit of the LLP 20.3 The nature of the LLP A separate legal entity Capacity of the LLP 20.4 Incorporation 20.5 Name of the LLP 20.6 Registered office 20.7 Membership and members relationship with one another The rights and duties of members Former members Designated members Membership changes 20.8 Authority of members 20.9 Disclosure obligations Accounts Changes in membership Confirmation statement Name Registration of charges Electronic communications and websites Insolvency of an LLP Liability of members in an insolvent winding up Liability of member for withdrawals before winding up Disqualification Taxation Summary Chapter 21: Choice of Business Medium 21.1 Introduction 21.2 Legal considerations private company Limited liability Corporate personality Floating charges 21.3 Legal considerations partnership Formalities and cost Privacy Flexibility 21.4 Legal considerations limited liability partnership 21.5 Other issues 21.6 Tax considerations Factors to consider 21.7 Summary ix

10 x Chapter 22: Transfer of a Business 22.1 Introduction 22.2 Taxation 22.3 Income tax 22.4 Capital gains tax Roll-over relief Relief for gifts to company Replacement of business assets 22.5 Inheritance tax (IHT) 22.6 Stamp duty and stamp duty land tax 22.7 Allotment 22.8 Other matters 22.9 Summary Chapter 23: Corporate Insolvency Rescue Procedures 23.1 Introduction 23.2 Principal procedures Administration Administrative receivership Company voluntary arrangement (CVA) 23.3 Definition of insolvency Inability to pay debts 23.4 Insolvency practitioners Creditors decision making and communications with creditors: the position under the Insolvency (England and Wales) Rules Administration Purpose of administration Appointing an administrator to a company The out-of-court route: company or directors The out-of-court route: qualified floating charge The court route Effect of administration Curtailment of proceedings Publicity Process of administration Functions of the administrator Pre-pack sales Ending administration 23.6 Receivers and administrative receivership Receiver Administrative receivers Administrators and administrative receivers a comparison 23.7 Company voluntary arrangement Setting up a CVA Implementing the CVA Optional moratorium Eligible companies The effect of the moratorium Procedure for securing a moratorium Approval of a voluntary arrangement Responsibility of the nominee Directors responsibilities

11 Completion of voluntary arrangement 23.8 Voluntary arrangement or administration a comparison Procedural differences Practical differences Differences in powers Advising the directors 23.9 Summary Chapter 24: Winding up, or Liquidation of, a Company 24.1 Introduction Compulsory Voluntary 24.2 Compulsory winding up by the court Inability to pay debts Just and equitable Locus standi Procedure Liquidation committee Effects 24.3 Voluntary winding up Types By members By creditors Effect 24.4 Proceedings against the company 24.5 Liquidators powers, duties, removal Powers and duties 24.6 Collection of assets Liability as contributories of present and past members: calls on shares Property Acceptance of shares Penalties for misapplying company assets Fraudulent trading Wrongful trading Misfeasance or breach of fiduciary duty Re-use of company names Prosecution of delinquent officers and members Setting aside corporate transactions Charges void for want of registration Trust assets 24.7 Winding up continuing for more than a year 24.8 Distribution of assets Proof and payment of debts Application of assets VAT bad debt relief 24.9 Dissolution Summary xi

12 Chapter 25: Setting Aside Corporate Transactions 25.1 Introduction 25.2 Transactions at undervalue 25.3 Preferences 25.4 Relevant time 25.5 Extortionate credit transactions 25.6 Avoidance of certain floating charges 25.7 Transactions defrauding creditors 25.8 Summary Answers to Self-assessment Questions Appendix Index xii

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