Notesale: Turn your study into money

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SETTING UP IN BUSINESS
Must cover the following matters with new clients:
1
...
Conflict of interest check
3
...

4
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Open a matter

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Legislation:
1
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LLPs Regulations 2001 Default provisions on capital and profit
share between members
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LLPs (Accounts & Audit) (Application of Companies Act 2006)
Regulations 2008 Set out accounting requirements
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LLPs (Application of CA 2006) Regulations 2009 apply the CA 2006
to LLPs, e
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must have a register of charges and file an annual
confirmation statement
...
Similar disclosure to companies:
1
...
Details of members
LLPs can, for a fee, keep registers of members, directors,
secretaries and charges at Comp
...

3
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LLPs need to keep a PSC Register disclosing all persons of
significant control
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Disclosing details of certain invoices and payment practices

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May trade immediately? No, as LLPs must be registered
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1 person but cannot form
sole trader business for more than 1
...
Flexibility but pressure if sole trader has no
support
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Expenses when setting up: No formalities so no setting up costs
On-going expenses after the business is set up: None necessary,
although usually accountants will be involved in keeping accounts
Methods of financing: No quick options
...

Profits: All profits go to the owner
...

May trade immediately? Yes
...
The company
may therefore own property, enter into contracts, sue and be sued in its own
name
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Partnership

s
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– May form a partnership irrespective of contrary intention
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The partnership is unable to own property or enter
into contracts
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If partnership goes insolvent, creditors
can enforce debt against the partners personally
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2 persons
Expenses when setting up: None necessary, although it beneficial to
have a Partnership Agreement drawn up by lawyers (more expensive)
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Methods of financing: Partners can borrow but cannot create floating
charges
...

Liability: Not limited - Partners have unlimited personal liability
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No disclosure required
May trade immediately? Yes
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– Common for Law firms
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But for tax purposes, it
is treated as a partnership and the m
buyer can claim for breach of contract (damages)
...
e
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Retention or escrow account:
A retention account is used where part of the purchase price is put into
a bank account opened in the joint names of the seller and the buyer (or
their respective solicitors) pending the outcome of, for example,
litigation involving the target company
...
If not, and the target has to pay out, the monies are returned to
the buyer
...
However, a
clause attempting to exclude liability for a fraudulent misrep will be
deemed to be unreasonable and therefore unenforceable
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Exclusivity (lock-out) agreement
Conditions Precedent:
Used where consents, clearances or the completion of specified
documents is prerequisite to the buyer entering into the SPA
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Contractual protection for the seller:
The seller can limit their liability under the warranties by disclosing
against them
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Disclosure letter:
The seller’s liability for breach of warranty claims is usually limited by the
contents of the disclosure letter
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The company is in fact the
claimant in an action for a small debt
...
In doing this it is saying that the
warranty is true but for the litigation
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For share issue by company to investor: FA is also relevant
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679(1)
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678(1)
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general disclosures; and
2
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General disclosures are the ‘front-end’ of the disclosure letters
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Anything that the buyer could have found out is
deemed to have been disclosed
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The
specific disclosures relate to the specific warranties given
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Example: (Share Sale)
Security given by the target
company, P Ltd, and its
subsidiary, Q Ltd, in relation
to money lent to R Ltd by
the bank to fund the
acquisition, would not
constitute FA

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