Paper Topic:
Company Law
August 22 , 2007 Jon Brown Client Dear Sir Good day I am writing this letter to you in response to your request for an advisory opinion Facts Presented From our meeting , the following set of facts has been presented as basis for this opinion . As I understand it , you would wish to set up a company . In setting up such a company , you would want to accept a short-term investment from a wealthy family friend named Jane . However in doing so , you do not want to cede control
or management over the company . The amount of the investment is ?30 ,000 . In comparison , the company has an asset worth ?450 ,000 in the form of a long-term lease in Solihull
Options Presented
The following are options that you can offer Jane in return for her 30 ,000 investment
simple loan with interest
stocks in a private limited company
stocks in a public limited company
share in a limited liability partnership
First Option - Advantages in setting up a loan agreement
The first and simplest solution to the problem at hand is to convert the obligation to Jane into a loan of money . It can be a personal obligation to you or an obligation to the company that will be set up In either case , the return to Jane for her investment would be in the form of simple interest to be agreed upon by the parties . In this option , you or the company would simply have an obligation to Jane . The amount , together with the interest , would have to be paid according to the form and manner of payment to be agreed upon . The manner of payment could be by lump sum or by installments
Other Options - Advantages of setting up a company
The other options we would recommend will all involve the formation of a company . This is in consideration of your desire to set up a company This is also in consideration of the distinct advantages that forming a company would bring to your business
The formation of a company is a desirable and advantageous option to any business operating within the United Kingdom . The procedure in forming a company as well as the rights and responsibilities of companies are well established in British Laws such as the Companies Act 1985 , the Companies Act 1989 , the recently enacted Limited Liabilities Partnership Act
A clear advantage with forming a company is its limited liability feature . Limited liability would mean that all the debts incurred by the company would be paid using the company 's assets . The director or the shareholders running the company would not be held liable as a general rule . This feature makes companies good subjects of investment by outsiders . Because of this advantage , an outsider can decide to invest in a company share if offered and be limited as to liability to the extent of his or her share
Another advantage with forming a company is its aspect of continuity Once formed , a company acquires a separate...
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