You work for the Business and Corporate Division of ZXQ LLP. You have been asked to advise Nathan. Ten years ago, Nathan started a business a sole trader importing shoes from India. After six years, he then got his wife Annie on board to help out with the business. Annie has been a great help and the business has been growing fast and earned substantial profits. Nathan recently got in touch with an old friend Timothy who has been pioneering in the green tech sector over the past ten years, and is now an executive director of a fast growing company called GoGreen Ltd. (“GoGreen”). Timothy asked Nathan whether he was interested to invest in his business. Timothy also said that GoGreen is considering changing its business form to a public limited company in order to grow the business further. Nathan, at the age of 40, has been in the shoe trade industry for ten years. He feels that now is his opportunity to invest in a new venture and to get involved in Timothy’s business. He is even thinking of closing down his current business so that he can devote himself to GoGreen. As a prudent businessman, he would like to seek advice from your firm before he takes any action:
Please answer all the following questions:
1. Explain to Nathan the current form of business that he is now in with his wife Annie and their potential liability in this business. (8 marks)
2. Advise Nathan the following:
a. How a partnership can be dissolved and whether Annie can continue the business herself. (3 marks)
b. Outline 6 key matters that are usually dealt with in a partnership agreement.
3. Nathan would like to take Annie on board with him if he invests or gets involved in GoGreen, and would like to know whether Annie can become a company secretary for GoGreen as Timothy told him that there is currently no company secretary. He also wonders how GoGreen could get away without having a company secretary. Advise Nathan
4. Explain to Nathan the following:
a. The potential liability of a shareholder of a limited company. (4 marks)
b. The taxation of sole trader and partnership. (2 marks)
c. What taxes Nathan may need to pay as a shareholder. (1 mark) d. What taxes GoGreen may need to pay as a company
5. Nathan is also considering whether he would like to become a director of GoGreen. Advise him of the following:
a. How a director can be appointed. (2 marks)
b. The roles of an auditor. (6 marks)
c. Whether a director can be held personally liable for the company’s failure.
6. Explain and analyse to Nathan why GoGreen may want to change its business form to a public limited company, and the implications to him as a potential shareholder and director if GoGreen did become a public limited company
7. Nathan is concerned that Annie may not be too receptive as he is to the new venture, and as such he would like you to advise him of the comparative advantages and disadvantages of a company and a general partnership.
8. Outline and explain the procedure of scheme of arrangement under Part 27 CA 2006 and the role of the court. (10 marks)
9. As a prudent businessman, Nathan wants to understand the options available to a limited company in the event that the business is not doing well. Please advise him. (20 marks)
10. Outline and explain the following:
a. The basic procedure of mergers and reconstruction under Part 26 of the Companies Act 2006. (5 marks)
b. The role of the Panel on Takeovers and Merge
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