Greenwich Solicitors

Greenwich Company and Business Law FAQs

Should I set-up a sole tradership, a partnership, a limited company or a limited liability partnership?

Sole tradership

Advantages – extremely easy to set-up and run as there are no formal legal requirements.

Disadvantages – there is no separation in the business’s liability from your own personal liability, which puts your own personal assets at risk.

Partnerships

Advantages – easy to set-up and run as there are no formal legal requirements.  Ideal for multiple persons wanting to go into business together. The extent of the partner’s duties and obligations can be defined by a partnership agreement.

Disadvantages – like sole traderships, there is no distinction between the liability of the business and the partners, although the way in which this liability is shared amongst the partners can be dictated by a partnership agreement.

Limited Company

Advantages – companies are distinct legal entities meaning there is a distinction between the company’s liability and the personal liabilities of the shareholders.

Disadvantages – companies are legally more difficult to set-up and run.  For example, a company will have to file annual returns with Companies House and make sure key information is up to date.

Limited Liability Partnership

Advantages – a business structured as an LLP can generally be run in the same way as an ordinary partnership and enjoy the benefits of a special liability status that limited companies enjoy.

Disadvantages – like limited liability companies, LLP’s are more burdensome to set-up and run.

I am a director of a private company.  Do I have to hold an annual general shareholder meeting ?

As a result of changes to the law, directors are not obliged to hold annual general meetings, unless the company’s articles of association state otherwise.

However, for some decisions, according to company law, articles of association or shareholder agreements, you may have to hold a shareholder meeting to make some decisions whereupon a general resolution or special resolution will need to be passed.  An example of where this is the case is where changes to the company’s articles of association wish to be made.

Can shareholder decisions in a private company be made in writing ?

Yes, shareholder decisions can be made in writing using a written resolution, so long as the procedures required in the Companies Act 2006 are adhered to and the decision does not relate to the removal of a company director or auditor.

What procedures should I follow when using a written resolution ?

Written resolutions can either be issued by shareholders or the board.  When using a written resolution, the resolution must be sent to every shareholder and give a certain amount of time within which to vote on the resolution.  Naturally, you should state exactly how the shareholders will be able to indicate their agreement or disagreement with the resolution, whether by writing, email or otherwise.

What percentage of the shareholder’s vote is required for a general resolution to be passed ?

A general resolution requires 50% of the shareholder’s vote.

What percentage of the shareholder’s vote is required for a special resolution to be passed ?

A special resolution requires 75% of the shareholder’s vote.