Just to take advantage of the EU passporting regime, and to steer clear of including any non UK entity into the UK tax net, a UK body corporate is usually recommended. This can take two forms:
Compliance Consultant or your legal/tax adviser can furnish additional information on the benefits of either vehicle upon request. Many firms are created as LLPs because of the more flexible nature of the vehicle compared to a limited company and the self-employed tax status available to its key principals.
Individuals – Sole Traders
This, as the name proposes, is an individual trading on his or her own account. Although the individual may use a trading name, for legal purposes the appropriate entity is the individual.
A company has a legal personality distinct as from its members (shareholders), owners, directors or officers. The firm can for that reason be an FCA Authorised Person in its own name. In the Companies Act 2006 the term company is normally defined as a body formed under that legislation but it can in certain circumstances include other bodies.
The name of a private limited company has to end with the word “limited” or the abbreviation “ltd” and this should exist on all company correspondence and documents. A private company need not have any employees but it must absolutely have at least a single director. It need not have a company secretary unless its articles of association state otherwise.
Public Limited Company: The name of a public limited company must end with the words “public limited company” or the abbreviation “plc”. A public limited company is required to have a company secretary. A public limited company is one whose shares are traded, as opposed to the simple public limited company whose shares can not be so easily or publicly transferred.
Any limited company may own subsidiaries that are private limited companies.
A limited company must be registered with the Registrar at Companies House and is given an unique company number. Whenever a company adjusts its name, the legal entity remains the same and this is indicated by the same company number.
Directors have a legal duty to act in good faith, exercise independent judgment and act with skill, care and diligence. There is also a duty to stay clear of conflicts. The statutory responsibilities according to section 172 Companies Act 2006 are summarised as follows:
Directors have combined responsibility for the company which they manage and it is because of this their responsibility to set the standards which employees are expected to meet and to make sure that those standards are met. In the United Kingdom directors have the same legal duties, responsibilities and potential liabilities despite whether they are full-time or non-executive directors. A director may be able to indicate to the contrary by, for instance, reference to minutes of Board meetings. It may be that individual directors have well-defined roles, so that one or more director(s) is more responsible for specific areas than others.
Section 251 of the Companies Act 2006 recognises that a person may be treated as a shadow director where the company or the nominated directors are accustomed to act according to the instructions of that person. However another company is not to be considered a shadow director of any of its subsidiaries for the functions of the general duties on Directors under the Companies Act just due to the fact that the directors of the subsidiary are accustomed to act based on its instructions or instructions.
A company may possibly in many ways be identified to a human body. It has a brain and nerve centre which oversees what it does. It also has hands which hold the tools and act based on directions from the centre. Some of individuals in the company are mere servants and agents who are nothing more than just the hands to do the work and can not be said to represent the mind and will. Others are directors and administrators who speak for the directing mind and will of the business, and manipulate what it does. The mindset of these business managers is the frame of mind of the business and is treated by the law as such.
A partnership is created by a legally binding agreement (written or unwritten) between two or more legal persons to work together. In a partnership, each partner is jointly (together) and severally (individually) liable for the acts of the partnership. Partnerships must not be confused with a newer kind of body known as a limited liability partnership (LLP).
Any two or more individuals could be partners. In England and Wales where a new partner joins the venture or where an existing partner leaves the business the partnership is wrapped up in law unless specifically permitted in the written partnership deed (agreement). Where one or more new partners join a new partnership may be created and there is a development in entity.
Two or more businesses might combine their resources to execute what is termed a Joint Venture. This can take several forms. Each individual company performs an individual contract, although they may collaborate for administrative or organisational reasons. Each provider would be liable for its own breaches and could therefore be prosecuted in its own name without deflection to any of the other companies involved. The companies involved supply resources to the creation of a new company for the purpose of the joint venture. This unique company is a legal person, which may be prosecuted in its corporate name. The businesses involved manage the project under a business name without forming a new company. This will constitute a partnership by which the companies are the partners. They will be jointly and severally liable for contraventions arising from the venture.
In Scotland a partnership is an association between 2 and 20 persons formed to carry on a common business (excluding practicing solicitors, accountants and members of a recognised stock exchange). Scottish law allows a partnership, or a firm, to become created without any written or oral agreement between the partners even though a written agreement is usual. Partnerships can operate under the names of the partners or under another name. In Scotland a partnership is a separate legal entity and legal proceedings may be instituted against that partnership under its trading name. Scottish law also permits a limited partnership consisting of one or more “general partners”, who are liable for all debts and liabilities of the firm, and one or more “limited partners”, who are liable upon terms of limited liability to the firm’s creditors. Limited partners play no part in the control of the partnership. A limited partnership, like a general partnership, is a legal entity.
Limited Liability Partnerships.
Limited Liability Partnerships are known as “LLPs” and are a relatively new form of business entity.
An LLP must absolutely register at Companies House or Registrar in Scotland, and its name must end with the words ‘limited liability partnership’,.
or’ LLP’, or the Welsh equivalent- ‘partneriath atebolrwydd cyfngedig’. It must state its name on all its correspondence and documents.
Similar to a company, the LLP’s registered office will be recorded at Companies House. Like partnerships the members can be individual persons and/or corporate entities. The LLP is owned to its ‘members’ or ‘designated members’ and all existing or designated members of an LLP must be recorded with Companies House. Individual designated members of the LLP may have additional functions within the partnership related to its running, e.g. compliance or perhaps signing of the accounts; when acting in these roles the designated members will be acting on behalf of all participants in the LLP. If the number of designated members drops to one then there is a period of grace of 6 months before the LLP status and protections are lost.
A Note on Business Names.
Many individuals and many companies use trading names, these have no legal status and so the real legal name must be used for official use. A person carrying on a business in a name other than their own must include their true name in business correspondence and documents, and specify an address where documents can be served. There is also a requirement to display this information in a prominent position at every place of business.
Similar provisions apply to partnerships, where the name of each partner must be stated if the name of the partnership does not contain the surnames of the partners; and,
to registered companies which operate under a name other than the full corporate name of the company.
Certain ‘sensitive’ names are offered protection by law and can not be used in businesses that are not approved. Check the details out at https://www.gov.uk/government/publications/incorporation-and-names/annex-a-sensitive-words-and-expressions-or-words-that-could-imply-a-connection-with-government.
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