c6

Question 1

sole trader - types of charges

Answer 1

fixed - not floating

Question 2

co - types of charges

Answer 2

fixed and floating

Question 3

sole trader - liability

Answer 3

unlimited liability. business is not a separate legal entity

Question 4

min number of partners in a p’ship

Answer 4

2

Question 5

what must a p’ship be doing?

Answer 5

carrying out a business NOT holding co

Question 6

what is the aim of a p’ship? what can the aim not be

Answer 6

aim: profit making
cannot be the aim: business experience

Question 7

how do partners split profits?

Answer 7

equally - unless stated otherwise in a p’ship agreement

Question 8

can partners have salaries?

Answer 8

no

Question 9

partnership agreement/deed - is this requierd?

Answer 9

no - if there is not one in place, follow p’ship act

Question 10

what is the nature of the relationship of a partner to a p’ship?

Answer 10

fiduciary
-act in good faith
-not to exercise a legal right over an improper motive
-not to keep profits from other partners (unless consent given)
-avoid conflicts of interest without full disclosure

Question 11

what happens if a partner breaches their fiduciary duties?

Answer 11

may render the partner liable

Question 12

partnership: profots/losses

Answer 12

shared equally

p’ship deed stats profit share but not loss share = share same as profit ratio

Question 13

partnership: capital deficiency

Answer 13

shared amongst partners not in loss ratio but in ratio to amounts of capital they originally contributed

Question 14

partnership: mgmt

Answer 14

every partner entitled to take part in mgmt decisions

ordinary mgmt decisions: majority of partners

Question 15

partnership: change in business

Answer 15

any decision in changing the nature of the business = unanimous

Question 16

partnership: new partners

Answer 16

unanimous

Question 17

partnership: variation to p’ship agreement/deed

Answer 17

can be varied with unanimous consent of all partners

Question 18

partnership: imdenify

Answer 18

all partners must be compensated for liabilities incurred in the ordinary and proper conduct of the business (ie expenses paid back)

Question 19

partnership: renumeration

Answer 19

no partner is entitled to salary (they get split of profits)

Question 20

partnership: interest on capital

Answer 20

per p’ship law: no interest on capital (allowed if in p’ship agreement)

BUT extra capital = 5% interest

Question 21

partnership: records and accoutns

Answer 21

all partners have access

must be kept at main place of business

Question 22

partnership: expulsiojn

Answer 22

expulsion = majority of partners BUT good faith + good reason

Question 23

partnership: dissolution

Answer 23

authority of partners after dissolution continues so far is necessary to wind up the p’ship affairs/complete transactions

on dissolution - any partners can insist on realization of assets/payment debts/distribution of surplus

Question 24

partnership: liabilty

Answer 24

joint + severly liable for acts of fellow partners

someone can sue: partner A, partner B or both

Question 25

partnership: agent rule

Answer 25

agent unless -no authority to act for the firm AND third party knows he has no authority/does not believe him to be a partner (perception of 3rd party is key) -if a partner pledges the credit of a firm for a purpose unrelated to the firms ordinary business: the firm will not be bound unless the partner has express authority to do so

Question 26

partnership: debts incurred before joining

Answer 26

not liable

Question 27

partnership: debts incurred whilst partner

Answer 27

liable

Question 28

partnership: debts incurred after retirement but incurred whilst partner

Answer 28

liable

Question 29

partnership: debts incurred after retirement

Answer 29

not liable UNLESS: - 3rd party is unaware they have retired they need to: -notify ALL creditors -change letterhead

Question 30

partnership: dissolution per p'ship act (if not agreement in place) - in what instances:

Answer 30

-death/retirement of a partner -expiry of a fixed term partnership -completion or termination of a single joint venture -subsequent illegality -notice given by a partner if it is a p'ship of indefinite duration -order of the court

Question 31

partnership: default of partnership - what can creditors do?

Answer 31

can take action against individual partners OR the p'ship

Question 32

LLP - difference to partnership:

Answer 32

limited liability (separate legal Co) BUT more regulation

Question 33

LLP - incorporation doc is signed by how many members?

Answer 33

2 members

Question 34

LLP - what info needs to be submitted to CH?

Answer 34

-name of LLP -location of registered office -address of registered office -names + addresses of all members of LLP -names of 2 designated members who are responsible for signing nptices aand accounts and delivering to registra -registration fee

Question 35

does an LLP need an agreement?

Answer 35

no - if there dont have one they follow LLP Reg 2001

Question 36

do LLP agreements need to be filed with registrar?

Answer 36

no

Question 37

LLP - dissolution - how

Answer 37

voluntary arrangement appoint a liquidator: voluntary or compulsory -go into administration

Question 38

LLP dissolution - difference to companies:

Answer 38

withdrawals made by members < 3 yrs prior can be clawed back if can be shown they knew about insolvency past and present members may be required to contribute to the assets of the LLP to the extent that they have done so in their LLP agreement

Question 39

partnership: charges

Answer 39

fixed

Question 40

LLP charges

Answer 40

fixed + floating (it is a Co)

Question 41

partnership - conflicts of interest

Answer 41

fidiciary duty to the partnership - avoid conflicts of interest without full disclosure

Question 42

partner - usual acts for the normal course of the business BUT no authority

Answer 42

p'ship is still bound UNLESS: TP knew they had no authority OR does not know/believe them to be a partner

Question 43

partnerships - did they get dissolved?

Answer 43

yes - can be wound up in the same way as an unregistered company

Question 44

partnerships - why would they get dissolved?

Answer 44

-death/retirement of partner (usually changed in the agreement) -order by court -expiry of a fixed term p'ship -subsequent illegality -notice given by a partner if it is a p'ship of indefinite duration -completion/termination of a JV

Question 45

do LLPs need formal p'ship agreement?

Answer 45

no

Question 46

do p'ships need formal formal f'ship agreement?

Answer 46

no

Question 47

T or F = an LLP must have at least one member whose liability is unlimited

Answer 47

false = liability of every member is limited

Question 48

do partnerships or LLPs need to submit confirmation statements to the registrar of companies?

Answer 48

partnerships - no LLPs - yes

Question 49

(1) Voluntary arrangement (2) Administration (3) Voluntary liquidation (4) Compulsory liquidation which are applicable to LLPs?

Answer 49

all of them!!

Question 50

are partnerships required to have a secretary?

Answer 50

no - only public Co are required to have secretaries

Question 51

when does a p'ship begin?

Answer 51

when the partners agree to conduct their business activity together - this may be before trade begins!

Question 52

minimum number of partners subscribed onto an incorporation document

Answer 52

min = 2 designated members - responsible for signing notices and accounts and delivering them to the registrar