Blue Chi’s

I had to force myself to blog this, Ramadhan is really messing up my schedule, only week it left, I will survive.

My Company Law tutorial group is really cool, it is very international, there are two British girls, one Indian Malaysian guy, one Chinese Malaysian girl, one Polish guy, one French guy, an Indian girl, and me!

The first tutorial was generally about the difference between incorporation and other forms of carrying business.

1. Sole Trader: This is the default status of an individual carrying on a business. The advantages of this form of trading are that there are no formalities to establish the business and that there is no disclosure required. On the other hand, there is no legal separate personality and there is no limited liability.. Obviously.
2. Partnership: There are a couple of other forms of partnerships, however, the regular partnership requires no formalities, it is much more flexible that incorporation as you can contractually do it in any way you wish, there is no disclosure and no regulation, it has tax advantages over incorporation, and because each partner is equally liable this presumes that it should make them work more efficiently. On the other hand, there is no limited liability, no separate legal personality, it is unstable by default as its existence depends on the existence of each of the members (but that however could be overcome contractually), every member acts as an agent for all the other partners, and is hard to gain money from outside as each contributor would usually become a partner.
3. Limited Partnership: This form of partnership features ‘sleeping’ partners that have limited liability for the price that they are not involved with the management, those are called “Sleeping Partner”, yet still, all other partners will have unlimited liability. Everything else is identical to normal partnership.
4. Limited Liability Partnership: This is a new invention in the UK, it features limited liability and is not regulated as strictly as incorporations. The advantages of LLPs is that they are taxed as partnerships and not companies, on the other hand it requires some effort to create in comparison to normal partnerships and there distinction between members and directors does not exist by default.
5. Incorporation: Incorporation grants a separate legal personality to the business. Optionally the company could take Limited liability, either by shares or guarantee, if limited by shares, contributing members would only be liable to the nominal price of their shares, which they usually pay upfront, companies limited by guarantee decide upon an amount to be paid in case the company went into liquidation. Limiting liability by guarantee is usually used for charities and not commercial organisations, however, it is possible to have a company unlimited. In addition to this a company could be public or private, a public company is one that offers her shares for sale and exchange in a public share exchange market, it is regulated more strictly than private companies, a company that does not have its shares listed in a public market. The cons of choosing to run a business as a company is that you have to disclose details of your address, name, etc, and that it requires certain formalities to be carried out, like drafting a constitution, etc. In reality, the UK has some of the easiest and cheapest procedures in the world to create a company, there is no requirement for a minimum amount of capital to start a private limited company, and the fees to start a company could be as low as £15 when you do it online, which is the procedure that takes the longest for establishing a company, this period is… 5 days. You can make a company in the UK in one day only, but you’ll have to pay £30 and will have to go to the Company House.

*This was a messy entry, I might rewrite it later, but I just wanted to have something online.