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SETTING UP IN BUSINESS
Must cover the following matters with new clients:
1
...
Conflict of interest check
3
...

4
...
Open a matter

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Legislation:
1
...
LLPs Regulations 2001 Default provisions on capital and profit
share between members
...
LLPs (Accounts & Audit) (Application of Companies Act 2006)
Regulations 2008 Set out accounting requirements
...
LLPs (Application of CA 2006) Regulations 2009 apply the CA 2006
to LLPs, e
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must have a register of charges and file an annual
confirmation statement
...
Similar disclosure to companies:
1
...
Details of members
LLPs can, for a fee, keep registers of members, directors,
secretaries and charges at Comp
...

3
...
LLPs need to keep a PSC Register disclosing all persons of
significant control
...
Disclosing details of certain invoices and payment practices

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May trade immediately? No, as LLPs must be registered
...
1 person but cannot form
sole trader business for more than 1
...
Flexibility but pressure if sole trader has no
support
...

Expenses when setting up: No formalities so no setting up costs
On-going expenses after the business is set up: None necessary,
although usually accountants will be involved in keeping accounts
Methods of financing: No quick options
...

Profits: All profits go to the owner
...

May trade immediately? Yes
...
The company
may therefore own property, enter into contracts, sue and be sued in its own
name
...

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•
•

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Partnership

s
...
– May form a partnership irrespective of contrary intention
...
The partnership is unable to own property or enter
into contracts
...
If partnership goes insolvent, creditors
can enforce debt against the partners personally
...
2 persons
Expenses when setting up: None necessary, although it beneficial to
have a Partnership Agreement drawn up by lawyers (more expensive)
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Methods of financing: Partners can borrow but cannot create floating
charges
...

Liability: Not limited - Partners have unlimited personal liability
...
No disclosure required
May trade immediately? Yes
...
– Common for Law firms
...
But for tax purposes, it
is treated as a partnership and the members will be taxed as partners, each
being liable to pay tax on his share of the income of the LLP
...

Expenses when setting up: Low costs, but must pay legal fees for
Partnership Agreement
...

Registration fee + Incorporation document
2
...

Printing of LLP stationery

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On-going expenses after the business is set up:
2008 Regs Accounts must be prepared by accountants annually
...

SBEEA 2015 File a Confirmation Statement min
...

Higher costs due to regulation and disclosure rules
...
There is therefore nothing about
calling of (or procedure at) meetings
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Methods of financing: LLP can borrow and create floating charges
...
Cannot raise finance by issuing shares
...
7(1) CA 2006 Min
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, as well as incorporation fees due to Companies House
...
High on-going administrative costs
(More than LLPs) because of the greater regulation and disclosure
rules
...
Companies can adopt their own tailor made
articles instead of the model articles
...

Again, of members give personal guarantees, limited liability is lost
...
e
...


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Liability to third parties: s
...

Legislation: CA 2006 + all other relevant legislation and common law
...

s86 CA 2006 Registered office
2
...

Information on directors (and secretary if the company has
one) and members
...
House as an alternative to internal registers
...

need to keep a PSC Register disclosing all persons of significant
control
...

Disclosing details of certain invoices and payment practices

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PARTNERSHIPS:
Key characteristics of a partnership:
tax transparent
allows for a high degree of confidentiality
min 2 people
PA 1890 does not distinguish between actual and legal persons,
so a company could be a partner
...
Default provisions are
disadvantageous and must set up a Partnership Agreement
...
5 PA 1890 Each partner is an agent of the firm, and will bind
the firm and other partners by contracting with third parties
...
6 PA 1890 The firm will be bound by the actions of anyone
authorised to act on the firm’s behalf
...
30 PA 1890 All partners share a fiduciary relationship and have
a duty not to compete with the firm by carrying out a similar
business without the permission of the other partners
Advantages:
× it costs nothing to create a partnership
...
586 and s
...

£50,000, of which at least
1/4 must be paid up
...
154(2) 2

s
...


s
...


s
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270(3)(b) There is no
company secretary, the
directors (or any person the
directors authorise) may do
anything that the secretary
is authorised to do
...
19 PA 1890 The partners’ mutual rights and obligations can be varied
at any time by their unanimous consent
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Partnership Property:
Each partner owns a share in the partnership property
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Private company

s
...


s
...


Certificate
required
before start of
trading

s
...


s
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Can commence business as
soon as incorporated
...

s
...

Shares can be issued
without immediate
payment
...
761(1)(2) Cannot
commence business until a
trading certificate is issued
by Registrar showing that
the company allotted
share capital is not less
than the minimum
...
336 Must have min 1
annual general meeting
each year
...
593(1) Payments in cash
only or where
consideration has been
independently valued
...
586(1) 25% of nominal
value must be paid on
allotment plus the whole
of any premium
Public companies are able
to offer their shares to the
public so they are subject
to a higher level of
regulation than private
companies
...
755(1) Prohibited

FSMA imposes
considerable other
restrictions

CONFIRMATION STATEMENT:
Min
...
H
...

ss112A and Part 2A CA 2006 (ss
...
167A-E, 274A, ss
...
H
...


PEOPLE WITH SIGNIFICANT CONTROL:
Part 21A CA 2006 PSC regime: applies to all companies except listed
companies
...

Part 1, Sched 1A CA 2006 A PSC over a company is an individual who
meets at least one of the following:
1
...
The person holds the right, directly or indirectly, to appoint or
remove a majority of the board of directors of the company;
3
...

s
...
Failure to do so is a criminal offence
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BLP – All chapters – Revision notes | Page 2 of 28

REGULATION OF FINANCIAL SERVICES:
General prohibition:
s
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23 FSMA 2000 The maximum penalty for breaching this prohibition is
2 years in prison and/o

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