LA0703 - BUSINESS LAW AND PRACTICE

Lead Textbook
Business Law, Slorach & Ellis Oxford University Press


Additional Reading
Partnership Law, Morse Oxford University Press
Company Law, Mayson, French and Ryan, Oxford University Press
Gore Browne Company Law, Jordans
Company Law, Boyle & Bird et al Jordans

There are a number of on-line resources that students are guided to including

Companies House website
UK IPO
Business Link
Financial Times

PART 1. THE BUSINESS ENVIRONMENT

1.1 Introduction to business media An outline of the basic distinctions between sole
traders, partnerships, limited liability partnerships and companies limited by shares. To examine the advantages and disadvantages of differing business media.

1.2 Sole traders An examination of the basic legal and practical requirements of setting up in business as a sole trader.

1.3 The business name The choice of business name, legal requirements and practical difficulties. Protecting the name once established. Part 42 of the Companies Act 2006, Company and Business Names Regulations; Passing off; Trade marks (outline).

1.4 A basic guide to accounts How accounting data is used to prepare a profit and loss account and a balance sheet, understand the construction of and be able to analyse and interpret a simple balance sheet and profit and loss account of a sole trader, partnership and limited company, understand the nature of shareholders’ funds.

1.5 Value Added Tax VAT: An introduction to the basic principles of VAT including registration of taxable persons, taxable supplies, input and output tax, standard, zero rating and exemptions.

1.6 Taxation on the profits Including self assessment, profits from business, dividends, of a business savings, trading losses, pay as you earn system, IHT, anti avoidance measures and CGT.

1.8 Bankruptcy An outline of bankruptcy procedures and the implications for the individual.

PART 2 PARTNERSHIPS

2.1 Partnership law The main features of a partnership; definition; formation. Relation of partners inter se: Relation of partners to third parties; partners as agents; Cessation of partnership.

2.2 Drafting a partnership agreement Considering the needs of each of the partners and to address issues relating to professional conduct, such as conflicts of interest, client care, costs.

2.3 Taxation of Partnerships Income Tax, Capital Gains Tax, Capital Allowances

2.4 Understanding Partnership Duty to HMRC, appropriation account
Accounts

2.5 Limited Liability Partnerships (LLPs) Consideration of the LLP as a form of business association under the Limited Liability Partnership Act 2000. The main features of a LLP; corporate personality and limited liability. Taxation of LLPs

PART 3 COMPANIES

3.1 Introduction to companies The legal concept of a company. Types of companies. The main features of a registered company; corporate personality and limited liability. Private and public companies. Introduction to the companies constitutional documents, i.e. the articles of association. The process of registering a company. Electronic registration. Company names.

3.2 Interested parties The various interest groups in a company; directors, members, employees, creditors and their respective roles in the company including the role of the solicitor.

3.3 Directors Appointment and Service contracts, qualification and disqualification;
Removal resignation and removal. Managing director and chair person. Filings at Companies House.

3.4 Legal position of directors Consideration of Chapter 2 of the CA 2006, including directors powers and duties; directors as agents of the company; fiduciary position and duties of care and skill; duty to promote the success of the company and conflicts of interests.

To consideration of transactions, loans, quasi loans and credit transactions with directors and connected persons and issues of professional conduct for the solicitors arising out of these types of transaction..

3.5 Members Position Division of powers between the shareholders in general meeting and the board of directors.

3.6 General meeting Types of meetings; calling and conduct of meetings, including such matters as drafting notices, resolutions and minutes of meeting, quorum, proxies, etc.; types of resolutions, voting, statutory formalities.

3.7 Internal disputes and minority Power of the majority and its practical effects.
protection Implications when setting up a company or amending its constitution, such as relative voting power, classes of shares, special provisions in memorandum and articles, shareholder agreements.

3.8 Statutory protection The statutory derivative claims under part 11 CA
for minority shareholders 2006; and Part 30 CA2006 unfair prejudice and winding up on the "just and equitable" ground.

3.9 Financing the company Introduction to corporate finance, including share capital and loan capital.

3.10 Share capital Nature of shares; classes of shares. Authorised and issued share capital. Allotment (including statutory and pre-emptive provisions) Payment; allotment for cash and for non-cash. Registers; share certificates. Transfer and transmission. Consideration of professional conduct e.g. FSMA 2000 (s19 and 21), RAO and the Scope Rules. Money Laundering Regulations 2007 and POCA 2002

3.11 Control and maintenance of capital Maintenance of capital. Dividends. Financial assistance.
Company buying own shares.

3.12 Loan capital Introduction ; borrowing powers, secured and unsecured borrowing; debentures; fixed and floating charges; registration of charges; practical considerations; discharge; directors; loan accounts.

3.13 Taxation of companies Corporation tax; taxation of company profits and capital gains; close companies; taxation of distributions and disposals of shares, anti avoidance procedures, IHT on gifts of shares.

3.14 Company Accounts Analysis and interpretation of entries in the balance sheet and the profit and loss account, the need to account for taxation, consolidated final accounts.

3.15 Company liquidation Introduction to the different processes. Liquidation:
and administration compulsory and voluntary. Liquidators, receivers and administrators. Interests and protection of creditors. Fraudulent and wrongful trading. Misfeasance. Preferences and transactions at an undervalue. Validity of charges.

To enable the students to develop knowledge and understanding of the legal, practical and taxation implications of setting up and running a business (whether as a sole trader, partnership or public or private company) and of typical transactions and developments arising during the life and development of a business.

To develop the skill of practical legal research using paper and electronic sources and be able to identify, locate and retrieve a range of legal source materials.

To further develop the students’ understanding of legal principles and the place of law in its social, ethical, economic, and business contexts.
To enable students to develop an awareness and understanding of the commercial and business environment in which they will practice.
To prepare students for the business law training to be given during a training contract.

To emphasise the importance of being able to practise in a culturally diverse society and to communicate effectively with everyone involved in the legal process.

To recognise the role of other professionals and their expertise.
To enable students to develop an awareness and understanding of the professional responsibilities and obligations of solicitors through the application of the Rules of Professional Conduct with particular reference to matters covered by FSMA 2000 and by POCA 2002 and the Money Laundering Regulations 2007.

To further develop students’ ability to present legal information clearly, accurately and in an appropriate style.

On completion of the module, students should be able, in relation to transactions and matters which they undertake, to:

1. understand the nature and structure of the different business media and be able to select an appropriate medium and structure to meet the client's commercial requirements and to advise on the legal and taxation implications

2. be able to progress basic business transactions arising during the life and development of a business

3. understand the interests of different parties involved in the business including directors, shareholders and creditors of a business.

Students should also be able to:

4. interpret and apply primary source materials, constitutional documents and other relevant agreements

5. identify conduct and regulation issues, such as conflicts of interest and FSMA, as they arise in the context of relevant transactions

6. draft the relevant documentation and prepare the appropriate forms and filings.

In particular

Element 1: Business media

Students should:

1. be able to advise the client as to the advantages and disadvantages of different business media including sole traders, partnership and companies

2. be able to advise on form and legal structure and on the cost, procedures, formalities and taxation implications of setting up and running the business

3. be familiar with the procedures required to incorporate a company and/or form a partnership and understand the approvals, filings and procedures to enable the business to commence operating

4. be familiar with the roles, rights, responsibilities and liabilities of the participants

5. understand the procedures to alter the constitution of a company and to appoint and remove the officers of a company

6. understand how to allot, issue and transfer shares.


Element 2: On-going operations and common transactions

Students should be able to:

1. progress common business transactions and advise and take steps relating to the business’s on-going operations

2. advise on entering into contracts on behalf of the business (including issues arising from contracts in which directors have an interest)

3. advise on steps to protect the assets of the business

4. advise on issues arising from basic finance and lending

5. draft notices, agendas and minutes of meetings and complete and file routine statutory forms and maintain and up-date statutory books

6. advise on taxation of profits (income and capital) generated and distributed by the business

7. demonstrate an appreciation of the continuing duties, obligations and liabilities of the business and of its partners, directors and shareholders

8. advise on the options for and claims arising on insolvency, e.g. bankruptcy, winding up and administration

9. draft and review documentation to give effect to transactions.


Element 3: Stakeholders

Students should:

1. understand the different interests of parties involved in the business including the company, directors, shareholders and creditors of the business

2. be aware of potential conflicts between the different parties

3. understand the importance of knowing the client.


Element 4: Business accounts

Students should understand the basic principles of business accounting and should be aware of the need to interpret business accounts to ensure clients are appropriately advised. In particular, students should:

1. understand the terms used and basic accounting concepts

2. be familiar with how accounting data is used to prepare a profit and loss account and a balance sheet

3. understand the construction of and be able to analyse and interpret a simple balance sheet and profit and loss account of a sole trader, partnership and limited company

4. understand the nature of shareholders’ funds.

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This module will be delivered through a combination of large and small group sessions, directed learning and independent learning.

Use of large group sessions

These will be delivered to the entire module cohort and will be used mainly to introduce students to the main principles of business law and practice. Matters of current topical interest will be raised where possible.

Use of small group sessions

The small group sessions will be used to expand upon the material covered in the large group sessions, and will enable the students to apply the knowledge to realistic case studies. They will also provide a forum for detailed and critical analysis of case law, legislation, commercial practice and the regulatory framework.

Students will be given directed learning which will both expand on the materials provided in the large group sessions and prepare them for the small group sessions. This will be done via the eLearning Portal.

Students will also be expected to carry out independent learning which will include locating and reading relevant topical current issues.

a Summative assessment and rationale for tasks

The summative assessment will be split into two parts:

Part A will be a one hour closed book multiple choice paper. This will constitute 30% of the overall mark.

Part B will be a three hour open book practical paper based on advance documents. The use of advance documents allows the subject team greater opportunity to test knowledge and application in the examination and allows greater use of realistic legal scenarios. This part will constitute 70% of the overall mark.

There is a summative skill assessment in the context of BLP. Students are required to prepare a PLR report based on preliminary information.
b. Additional formative assessment – detail of process and rationale

Formative assessment will be provided by a combination of self test questions and multiple choice questions which students will complete through the module e-learning portal site and in small group sessions. Students will also have the opportunity to sit a mock open book examination paper.

As a formative assessment, students prepare two PLR reports on which they are offered individual feedback during a workshop session. c. Indication of how students will get feedback and how this will support their learning

The multiple choice questions are undertaken in a small group session and feedback given during this session. Detailed answers to the self test questions will be available on the e-learning portal and feedback on the mock examination will be given via the e-learning portal and in a large group session.

Feedback on practical legal research will be given on an ongoing individual basis and as an integral part of small group sessions.

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