CompaniesA considerable amount of publicity attaches to com-
panies – even small private ones.
Unless the members of the company have unlimited
liability – which is a possible form of corporate organisa-
tion – the company must file its accounts annually
together with the reports of its directors and auditors.
These items are kept by the Registrar and are available
for inspection by the public on request from Companies
House.
In the past, all companies whether public or private
were required to appoint auditors, which was an expense
forced on them but not upon sole traders and partner-
ships. However, there are now audit exemptions as
described below.
For financial years starting on or after 6 April 2008,
audit exemption is available provided the company is a
smallcompany (see opposite) with a turnover of not
more than £6.5 million and a balance sheet total of not
more than £3.26 million (i.e. asset value), and employ-
ees do not exceed 50 (see opposite). However, any mem-
ber or members holding not less than one-tenth of the
issued share capital can require the company to obtain
an audit for its accounts for that year. A company is not
entitled to the exemption if at any time during its finan-
cial year it was:1 a public company;
2 a banking or insurance company;
3 an organisation authorised to conduct investment
business under the Financial Services and Market
Act 2000, which, although originally not allowed the
exemption, under regulations made by the Secretary
of State for Business, Enterprise & Regulatory Reform
has been allowed the exemption in regard to financial
years ending on or after 31 December 2006; or
4 a member of a group of companies, unless it is an
exempt group under the current regulations as where
the turnover of the group as a whole is not more than
£5.6 million.In order to qualify for the exemption, the company
must be an eligible company and the balance sheet must
include a statement by the directors that:1 in the year in question the company was entitled to
the exemption;
2 no member or members have deposited with the
company a notice requesting an audit;Part 2Business organisations
88
The details of the precise entitlement of a deceased (or
bankrupt or retiring) member in this event will be agreed
between the members of the LLP and set out in the LLP
Agreement. Details of the contentof an LLP agreement
appear at p 137.
Companies
A company has what is called perpetual succession.
Thus, if A and B are the members of AB Ltd and A dies
or becomes bankrupt, the executors or trustee in
bankruptcy, as the case may be, must sell A’s shares to a
purchaser if they wish to realise the cash paid for them.
The company’s capital is unaffected and the company is
not dissolved. A company can purchase its own shares
under the Companies Act 2006 but it is not forced to
do so.
Publicity and external control of
the undertakingSole traders and ordinary partnerships
Little, if any, publicity attaches by law to the affairs of
these organisations. Their paperwork and administra-
tion is a matter for them to decide, subject, in a partner-
ship, to anything that the partnership agreement may
say about this. These organisations can keep their accounts
on scraps of paper in a shoebox if they wish to, though
obviously they should keep proper accounts. However,
subject to satisfying the Revenue as to the genuineness of
their accounts, usually through an independent account-
ant, there are no legal formalities and no filing of docu-
ments or accounts for the public to see.
Limited liability partnerships
Section 15 of the Limited Liability Partnerships Act 2000
gives the Secretary of State power to make regulations
that apply any law relating to companies to LLPs. These
regulations, i.e. the Limited Liability Partnerships Regula-
tions 2001 (SI 2001/1090), impose a disclosure and filing
requirement in terms of accounts and reports similar
to that of registered companies (see below). Thus, as
is usual, the acquisition of limited liability will involve
public disclosure of profits and the distribution among
the partners.