Partnership is a business arrangement in which several people work together and share the risk and profits.
In Britain and the US =
- Partnerships don’t have limited liability for debts, so the partners are fully liable or responsible for any debt the business has.
- Partnerships aren’t legal entities, so in case of a legal action; it is the individual partners and not the partnership that is taken to court.
In most continental European countries = there are various kinds of partnership which are legal entities.
Sole trader business is an enterprise owned and operated by a single person also has unlimited liability for debts.
Company is a business that is a legal entity, that has a separate legal existence from its owners and the shareholders.
Most companies have limited liability that where the owners are not fully liable or responsible for the business’s debts is called limited companies. Their liability is limited to the value of their share capital.
Share capital is the amount of cash that the shareholders have contributed to the company.
Director is a qualified manager and senior manager in the management of company.
Corporate governance is the way a company is run by the management for the shareholders and how the managers are accountable to the shareholder; include separating the job of chairman from that of managing director and having several non-executive directors on the board of directors who don’t work full time for the company but can offerand expert advice.
Non-executive directors are often more objective: less influenced by their opinions and beliefs, also an audit committee.
Auditor report is containing several non-executive directors.
The articles of association state when people found or start companies:
- The rights and duries of the shareholders and directors.
- The relationships among different classes of shareholder.
- The relationships between shareholders and the company and it’s directors.
The memorandum of association states :
- The name of company.
- The location of the company’s registered office. Registered office is a place to send official documents.
- The purpose of company. Purpose is a aim or objective.
- The authorized share capital; is the maximum share capital it can have.