UK Law and Practice Contributed by: Gareth Sykes, James Palmer, Isobel Hoyle and Hannah Whitney, Herbert Smith Freehills Kramer
1. Introductory 1.1 Forms of Corporate/Business Organisations
are commonly used by non-profit making organisations. • Partnerships, whereby persons come togeth - er to carry on a business with a view to a profit. A general partnership does not have its own legal personality and therefore can - not hold assets other than in the name of the partners. Other forms of partnership in Eng - land and Wales are limited partnerships (LP) and limited liability partnerships (LLP). In an LP, one or more partners have limited liabil - ity and one or more partners have unlimited liability. An LLP has a separate legal personal - ity and all partners have limited liability. 1.2 Sources of Corporate Governance Requirements The key sources of law governing the opera - tion of a company incorporated in England and Wales include the following. • Companies Act 2006 (the “Companies Act” ) – the UK company law regime is set out in the Companies Act, which is the principal body of legislation governing the formation and management of companies in the UK. The Companies Act has been fully in force since 1 October 2009 and has been amended numer - ous times since then, most recently by the Economic Crime and Corporate Transparency Act 2023 (ECCTA). The ECCTA became law in October 2023, but its provisions are being commenced in stages. • Insolvency Act 1986 – this Act contains provi - sions relating to the insolvency and winding- up of companies. • Common law – this includes the parts of the law relating to English companies that have no statutory basis but have been established by judges through case law. This body of case law is known as the common law.
Anyone choosing to set up a business in the UK may choose between a broad range of business structures. The most common type of company in Eng - land and Wales is a private company limited by shares. A company limited by shares is one in which, in the event that the company goes into liquidation, the liability of its shareholders is limited to the amount paid or payable when subscribing for those shares (that is, limited lia - bility). Private limited companies are not able to offer shares to the public, meaning they cannot offer shares if they consider those shares might become available to anyone other than those receiving the offer. Companies that wish to offer securities to the public are most commonly registered as a public company limited by shares. UK legislation also affords limited liability to shareholders in pub - lic companies but imposes certain additional restrictions and requirements for the protection of shareholders and creditors. More detail on public companies can be found in 3. Manage- ment of the Company . Other less frequently used forms of company structure include the following. • Private unlimited companies, which do not have any limit on the members’ liability in the event of the company going into liquidation and being unable to pay its debts. • Companies limited by guarantee, in which the liability of the subscribers is limited to the amount they have agreed to guarantee. These
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