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Business Law.

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Introduction

Introduction Businesses are often referred to as organisations. An organisation is a body that is set up to meet needs. Businesses satisfy these needs by providing people with goods and services. There are many different types of businesses and many different sectors of the market. Each type of business has its own laws and legislation regarding its set up and dissolution. Sole Trader The simplest and most common form of private sector business is a Sole Trader. This type of business is owned by just one person and this person will run the business and employ any number of people to help. Examples of Sole Traders could be Farmers, small construction firms, hairdressing, restaurants etc. Most sole traders are in retail and construction, where a very large number of shops and small construction companies are owned by one person. There are more sole traders than any other type of business, however the amount they contribute to the total output in the UK is relatively small. The setting up of a sole trader is quite simple. There are no legal formalities needed, but sole traders do have a certain amount of legal responsibilities once they are established. Also some types of business may need special permission or licences before they can begin trading examples of these would be the sale of alcohol or a public transport service such as Taxi's. Some of these legal responsibilities include paying income tax and National Insurance contributions. Also once the business has made a certain amount of money they must register for VAT. Planning permission may also be needed in certain locations, and as with every business Sole traders must comply with legislation regarding issues such as healthy and safe working conditions for their employees. There are many advantages for sole traders, these include: - * The owner has flexibility to choose their own hours of work, and take holidays when they want to. ...read more.

Middle

Those with more shares will have more control and can take more profit. Limited companies are run by directors who are appointed by the shareholders. The board of directors, which is headed by a chairperson, is accountable to shareholders and should run the company as the shareholders wish. If the company does not perform well the shareholders can vote out a director at an annual general meeting (AGM). ROLE OF DIRECTORS Soletraders:- This type of business is owned and run by one person who may employ as many people as he needs. He will then be the owner/manager/director of the company unless his business grows and he wishes to appoint a person as a director for his company. Owner is in complete control and is free to make any decisions. Partnerships:- Usually there are between 2 and twenty partners. These will all have a role in the running of the business and so there may be no directors but the partners will run the business and manage each side i.e. finance according to the partners specialist skills. The authority of an individual partner will vary depending on whether the firm is commercial or non-commercial. There is no need for directors in the above cases as they are not likely to hold board meetings and any meetings that are held the decisions will be made by the owner or the partners. Private Limited:- these may have only one director but the sole director cannot also be the company secretary. Generally the members nominate directors, however the director need not be a member himself. Directors can resign and may also be removed from office by an ordinary resolution of members usually at the AGM. Any person may be disqualified from being a director under the Company Directors Disqualification Act 1986. A director must act in the interests of the company and if he makes any profit from his position he may be required to account for it to the company. ...read more.

Conclusion

* The way they conduct their business is controlled by various company acts which aim to protect shareholders. There is a vast difference between the organisational structure of a public limited company and other companies. The difference between the business org can be seen in the table in appendix 1. Types of Shareholders There are many different types of shareholders that can be involved in a business these include:- * Directors - directors are elected by shareholders each year and they are responsible for running the business. They do not have to hold shares in the business but generally they do. * Managers - these are usually appointed by directors and are actively involved in running the business. Sometimes they are allowed to buy shares or given some as a bonus. It is argued that if managers hold a share in the company it might motivate them to perform well in their job. * Employees - as with managers some companies offer shares to staff as an incentive or bonus and a large number of people will own shares as they are part of the general public. * Individuals - with public limited companies they must ensure that at least 25% of their shares are bought by the public, and so individuals hold a large amount of shares. * Investors - these are financial institutions such as insurance companies who buy shares to earn income. They buy and sell large numbers of shares but rarely take part in the running of the business. * Other companies - some firms hold shares to control other companies and to build up stakes in companies with a view to taking them over in the future. These four types of business operate very differently and although some may have similar objectives they have to run their businesses in a way, which the legal regulations determine, and in a way that incorporates their target market and environment. Page 1 Business Law Assignment ...read more.

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