Task 4
Legal characteristics of a company compared to partnership and sole proprietorship under company act 2006
The main component of the legislation that governs the operations of companies in the UK is the companies act 2006. The act is the longest in the history of the UK, and it has more than 1,350 sections. The provisions of the act adopted to be laws in October the year 2009. The act has standard features that differentiate companies from sole proprietorship and partnership forms of businesses. In case the companies go into debts, the shareholders’ assets for example land and houses are not likely to be sold to settle the company debts, unlike the sole trade and partnership where personal assets become under threat of being sold to settle the business debts. The sole traders in business receive the profits in full as compared to companies and partnerships that share part of the profits and commit the rest to other projects. In case somebody is employed by companies, they can pay themselves for discharging duties on behalf of the company, but this is not the case with sole trade and proprietorship. The procedure to register sole proprietorship and partnership is less costly as compared to companies. In companies and partnerships, the individual shareholders have no direct control of the business operations as compared to the sole proprietorships where the owners have direct control over the running of their business. All the three forms can dissolve easily in case circumstances force to do so.
Appointment and removal of directors
There are legal formalities that must be followed in appointing and removing directors in a company. Firstly, the appointment of directors is made by the shareholders during the annual general meeting or during an extra-ordinary meeting when the conditions are extreme—the shareholders vote to affirm the resolution of appointment in what is called as the popular vote. In case a vacancy arises, the board of directors can tentatively appoint a new director. The appointment is subject for confirmation by the shareholders without delay in a general meeting. The shareholders may appoint a committee of its members or delegate the existing directors to carry on the process of identification of a new director on its behalf. The number of directors to be appointed varies from one company to the other depending on the company’s articles of association. The articles of association contain the rules of appointment that the shareholders agreement and put in place, among other things. After a new director has been appointed, the company has 14 days to notify the Companies House.
The companies’ directors serve at the mercy of the shareholders without a reason for removal. A director can be removed using a threshold of 50% votes during the shareholders meeting. However, suppose a director is removed in breach of the shareholders’ agreement or directors’ service contract. In that case, he/she can appeal the decision in court and can be awarded damages due to the shareholders’ decision. The removal of a director can be done through ordinary resolution, retirement by rotation, court disqualification or removal by the article of association of a company. Circumstances for the disqualification of a director are specified in memorandum and articles of association. Also, the articles don’t need to be referred for the removal to take place. After the removal of a director, the Companies House is informed within 14 days of retirement, resignation or removal.
Control and Management of Limited companies
The company officers who perform management activities of a company are the directors. The directors are employed or appointed by the shareholders and are, therefore, employees of the company. They may or may not be shareholders of the company. There are certain conditions that shareholders must uphold during the process of appointing the management authorities. In case of a private limited company, one director must not be from the corporate; the rest can come from corporate entities. The companies need not have a secretary according to the companies’ act 2006, which means a single director in place can kick start the process of company registration. The right age of engaging a director is at least 16 years. The appointed director must not have been disqualified from acting as a director from another company or must not be bankrupt. There are no professional or legal requirements in the case of a private company. A board of managers does the affairs of a company.The supervisory committee regulates updates on the management steps the company has undertaken. The supervisory committee is not allowed to perform any management tasks but can it can approve specific transactions of the company like borrowing or branch establishments.
Essentiality of copyrights, patent and trademark
Copyrights, patent and trademark are the three board areas of intellectual properties covering valuable business assets. Copyright is a published or unpublished way of protecting the original creators of drama, art, music, and other intellectual tasks. A copyright protects the expression form ignoring the subject matter.copyrights can be used to an organisation’s creative works like the songs, promotional features, brochures sales etc. Control of reproduction, distribution and presentation to the public. The patent rights help the owner to have exclusive rights of expelling others in the making,offering to sell or importing a given commodity in the name of selling for personal use. The trademark is a term used in many worlds of business. However, a trademark is very critical since it protects the company’s property making the difference between the company and the market products of his. Business owners need to take the trademark because it is an efficient way of protection and enforcement of the law.