Identify the Three Main Types of Business Organisations Recognised in Scots Law. Essay

Words: 1655
Pages: 7

1 Identify the three main types of business organisations recognised in Scots law. A. Sole trader

The most popular style of small business enterprise, it’s simple to set up and does not require any formalities. Sole trader often is a one person who manages and owns the company. They take all the profits, but must also include all losses. Indeed, if the only operator becomes insolvent personal assets may be used to satisfy creditors, such as a house, car, etc. They are personally responsible for all indebtedness of the company and have unlimited liability.

B. Partnership

C. Incorporated Bodies
Private Limited Company (LTD)
Public limited company (PLC)

2 Clarify for Gurpreet and Samuel, by distinguishing the
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The Company raises capital through the sale of shares, but cannot offer shares for sale to the general public, through the stock exchange. That's why the shares are usually sold to family and friends, but they cannot be resold without the permission of directors. Shareholders have the control of the company; they have the right to appoint directors who employ managers to run the company. However, the small company directors tend to be shareholders.

The formation of private and public limited companies regulates The Companies Act 1980.
There are two important documents in forming a company, which must be submit to the Registrar of Companies.

Memorandum of Association under Companies Act 1985 contain: * The company’s name * In case of a PLC, a sub-clause stating that it is a public limited company * The situate of company office * A statement of the objects of the company * Confirmation that the shareholders’ liability is limited * Capital clause: the amount of capital to be raised to start the company and the division of the share capital into shares of a stated amount

Articles of Association: * Rules for running shareholders’ meetings * Voting powers of the shareholders * Rights and powers of the directors * Powers of the company to raise additional capital

Limited by shares: It is the most common type of business and is what most people have in mind when considering whether or not to