for all debt and liabilities so therefore there is one or more ‘limited’ partner limited withliability. This is not very popular and there are some filing requirements with CompaniesHouse. In the Limited Liability Partnership every partner is an agent. This is a kind of incorporation that also has filing requirements with Companies House. The partners arenot liable for debts but are liable for negligence meaning they are still accountable toclients and this should mean they take more care with them. These types of partnershipmust be mentioned, but for the purposes of this essay, when referring to a partnership itwill be the type mentioned in the previous paragraph.In a limited liability company where the company is limited by shares
, under s74 (2)(d)of the Insolvency Act 1986
, the liability of the members both past and present isrestricted to the amount of unpaid share capital (if any).
This has the effect of protectingthe personal assets of an incorporated company from creditors (a barrier commonlytermed as the veil of incorporation), unlike the circumstances in a partnership. There arenumerous advantages of incorporation with the most obvious including limited liability, business assets being vested in the company, the ability to sue or be sued in thecompany’s name, perpetual succession, transferable shares and the ability to create acharge over assets to facilitate finance. There may also be taxation advantages.Disadvantages include the greater degree of formality and publicity of accounts, theexpenses incurred.
There is less flexibility regarding the rules of internal conduct asthese are laid down in the Companies Act 2006.In the company model, as far as the law is concerned, the company really exists and isoften described as an ‘artificial person’.
The company is regarded in law as a person
According to Mayson, French and Ryan “As well as having its own personality, a registered company isalso seen as being an association of persons who are called members of the company.” Under theCompanies Act 2006, those who wish to register a new company must subscribe their names in a‘memorandum of association’. In the vast majority of companies, membership is based on the holding of shares and thus the terms shareholder and member are one and the same. S. Mayson, D. French & C.L.Ryan,
Mayson French & Ryan on Company Law
, Oxford University Press, 26
Ed, 2009, p6
The equivalent legislation in Northern Ireland is the Insolvency (Northern Ireland) Order 1989
Law Express: Company Law
, Pearson Longman, 2009, p25
J. Birds, B. Clark, I. MacNeill, G. McCormack, C. Twigg-Flesner, C. Villiers, A.J. Boyle,
Boyle & Birds’ Company Law
, Jordans, 7
Ed, 2009, p57
P.L. Davies with contributions from S. Worthington & E. Micheler,
Gower & Davies’ Principles of Modern Company Law
, London, Sweet & Maxwell, 8
Ed, 2008, p33
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