Business and Corporate Law Case Study Example | Topics and Well Written Essays - 3500 words

Business and Corporate Law - Case Study Example In this assignment the business, which has been trading successfully as a partnership for many years, has decided to become a private company limited by shares. As such, they will be incorporated and registered under the Companies Acts, the main one of which is the Companies Act 1985. Under this act, the company must have a registered office1, which Lorraine and Brenda wish to have at Chancery Lane, London. The Act allows two or more persons to form a company with limited liability for any lawful purposes by following the formal requirements of the Act2. A memorandum and articles of association, which are the rules that govern the running and relationships of the company must be provided to the registrar as part of this process.3 Before getting into the details that regulate insolvency under the act I would like to just review the basics which you may already be aware of. As you have been acting under a partnership for some years you will have a general idea of how your business is performing and the likelihood of its future success. I do not see the change from partnership to limited company effecting your trading prospects materially. Therefore, if you have been successful as a partnership there is every reason to expect this success to continue after the change to company. You will have been used to operating under the partnership in a situation of unlimited liability. This means that in the event of the business failing, you both personally would have been liable for all of the debts of the business and stood to lose your homes and all of your personal assets. Fortunately, under a company, you will be protected by limited liability and this means that your personal assets will not be used to pay off the debts of the company unless some kind of fraud or wrong dealing is at play. However, all the assets of the business will be available to creditors of the business, and therefore, you should be very aware that any assets you transfer to the business will not be protected by the principle of unlimited liability and will be available to creditors should the business fail. Therefore, one way to minimize the risk of such loss is to avoid transferring unnecessary assets from the partnership to the