company law
Question 1
a)
i) Advantages:
The first major advantage is by having two people running the business gives the business a lot more flexibility about how to operate compare to sole traders.
The second major advantage is the low administration requirements compare to form a company. Disadvantages
The first major disadvantage is for partnership there are unlimited liability for Andy and Zara.
The second major disadvantage is there is no separation between Andy and Zara to manage and control the business. ii) Advantages:
The first major advantage is the company has limited liability for shareholders.
The second major advantage is the share of the company allow for transfer and expansion.
Disadvantages:
The first major disadvantage is the cost for compliance and rigorous regulation, especially for small business.
The second major disadvantage is separation of ownership and control often not appropriate for SMEs.
b)
i) Andy and Zara are not personally liable to Mungo, as they entered the lease as company “Young”. The shareholders are not reliable for any debts of the company.
Andy and Zara are personally liable to Wolf, as when they borrow the money it requires personal guarantee. The bank has the right to take their home away if they can’t repay the debt.
Andy and Zara are not personally liable to Tweed, as they buy computers as company “Young”. The shareholders are not reliable for any debts of the company.
ii) If Andy and Zara were running the business as a partnership, they would be personally liable to Mungo, as they have unlimited liability for any debts of the business.
Andy and Zara are personally liable to Wolf as they provided personal guarantee.
If Andy and Zara were running the business as a partnership, they would be personally liable to Tweed, as they have unlimited liability for any debts of the business.
C)
i)
Under section 5 of the Companies Act 1993 a company will be a subsidiary of another company if that other
a)
i) Advantages:
The first major advantage is by having two people running the business gives the business a lot more flexibility about how to operate compare to sole traders.
The second major advantage is the low administration requirements compare to form a company. Disadvantages
The first major disadvantage is for partnership there are unlimited liability for Andy and Zara.
The second major disadvantage is there is no separation between Andy and Zara to manage and control the business. ii) Advantages:
The first major advantage is the company has limited liability for shareholders.
The second major advantage is the share of the company allow for transfer and expansion.
Disadvantages:
The first major disadvantage is the cost for compliance and rigorous regulation, especially for small business.
The second major disadvantage is separation of ownership and control often not appropriate for SMEs.
b)
i) Andy and Zara are not personally liable to Mungo, as they entered the lease as company “Young”. The shareholders are not reliable for any debts of the company.
Andy and Zara are personally liable to Wolf, as when they borrow the money it requires personal guarantee. The bank has the right to take their home away if they can’t repay the debt.
Andy and Zara are not personally liable to Tweed, as they buy computers as company “Young”. The shareholders are not reliable for any debts of the company.
ii) If Andy and Zara were running the business as a partnership, they would be personally liable to Mungo, as they have unlimited liability for any debts of the business.
Andy and Zara are personally liable to Wolf as they provided personal guarantee.
If Andy and Zara were running the business as a partnership, they would be personally liable to Tweed, as they have unlimited liability for any debts of the business.
C)
i)
Under section 5 of the Companies Act 1993 a company will be a subsidiary of another company if that other