Company Law Coursework Example | Topics and Well Written Essays - 2500 words

Company Law - Coursework Example This legislation is a critical constituent of the constitution since it provides guidance to corporate entities2. Initially, company act begins by establishing diverse business forms. The key forms include partnership, sole proprietorship and companies. Sole proprietorship Sole proprietorship is the oldest business structure normally founded by a single party. Consequently, the founder of the organization serves as the overall manager of the entity3. Sole proprietorship lacks a legal personality since the owner is accountable for the organization liabilities. Similarly, the revenues of this entity act as the income of the founder for tax purposes. Sole proprietorship is the most rampant form owing to easy in formation. Moreover, the entity’s governance follows few regulations thus its operations are easy to manage. Despite the inclusion of the business form in company law, the entity lacks legal personality4. Therefore, strict legal analysis deters inclusion of Sole proprietor ship in this legislation. Because of the absence of a distinct legal personality, the founder bears all legal consequences that relate to the entity5. Partnership Represents an organization founded by more than one individual. An assorted forms of this partnership exists. Notably, the differences to the partnership exist due to liability of the founding members6. Unlimited liability characterizes a general partnership. Consequently, founders bear legal liability both individually and jointly for business’ transactions. This means that the entity has no legal individuality. Similarly, the founders coin a ratio that dictates sharing of profits. This ratio principally corresponds to the capital ratio. This section of the company provides the basis for dissolution of partnerships. Additionally, the legislation provides for limited partnership. Limited partnership deviates from the convectional partnerships by admitting partners with limited liability. Subsequently, the unlimited partner bears the blunt of the entity’s losses. Partnerships suffer multiple management hitches due to differing ideologies of the partners. However, the Company act provide for a treaty that guides the partnership. The treaty outlines how the partner will operate the entity. Moreover, it establishes the responsibility of the partners. Limited liability companies The Company act predominantly addresses this entity in detail. Fundamentally, a company represents an alliance of individuals with a unified objective. The legislation begins by establishing an entity with a distinct legal individuality7. The distinct legal individuality arose through judicial precedents. The distinct legal personality allows the entity to transact in its own identity. Additionally, a company can undertake legal action against a party. Similarly, the entity can be a defendant in litigation. â€Å"Salmon vs. Salmon† established the legal identity of the companies. Salmon, a shoe designer, incor porated his business with himself as a debenture holder8. Additionally, the entity borrowed more money creating creditors. Owing to industrial upheaval, the entity collapsed and the creditor applied for liquidation of the entity. In adherence to the company act, the liquidators paid Salmon prior to the creditors. Nonetheless, the creditor argued that the entity was a deception hence creditor should receive refunds before Salmon. The lords stated that the entity’