[ESTABLISHING A BUSINESS ENTITY IN ENGLAND] 164
Another possibility is to form a limited partnership ( LP ). In contrast to the LLP, in England and Wales, the LP has no legal personality of its own. Its partners, provided they are not involved in managing the LP, will be protected by limited liability, but it must have at least one general partner, whose liability is unlimited. The general partner may be a limited company. LPs are especially preferred by investment funds. They are neutral for tax purposes and are not taxed separately. 1.5 Using commercial agents As an alternative to forming a company or establishing a branch, a foreign company may also decide to work in the UK market through a commercial agent. Relations between a commercial agent and his or her principal are governed by the Commercial Agents Regulations 1993. These regulations contain a series of mandatory provisions designed to give the commercial agent greater protection. It should be emphasised that compensation is nearly always payable if the contract is terminated. If agreed in the agency contract, an indemnity is payable: if nothing is agreed in the agency contract, compensation is payable based on the notional value of the agency at the date of the termination. Fladgate LLP is one of the leading law firms in the area of commercial agency law and advises and represents both agents and principals. 1.6 Joint ventures A foreign company may also form a joint venture with a UK or another foreign corporation or an individual. Most commonly, the vehicle used will be a company, but it may simply be a contractual joint venture.
1.7 Buying or acquiring an interest in a company or its assets (M&A) As an alternative to forming a new company, the foreign business may buy an established company or purchase shares in it. This is certainly the quickest way of gaining a business foothold in the UK. A foreign business may buy (all or some of) the assets of an established company. This tends to be more complicated than buying shares in a company because the buyer will need to buy all the seller’s assets (which may include contracts, stock, debtors, real estate, intellectual property, employees, or goodwill) separately and may require the obtaining of many more consents than a share purchase and may have some tax consequences. M&A is an entire topic in itself, on which Fladgate LLP can advise if required (we have a top-ranked M&A practice). 2. Maintenance and reporting 2.1 Company Public filing requirements The company will be subject to English company law relating to the filing of information with the Registrar of Companies at Companies House. This information will be available for public inspection. Failure to comply with these requirements is a criminal and/or civil offence. Annual accounts and reports The company must keep proper accounting records which are sufficient to show and explain its transactions, to disclose with reasonable accuracy the company’s current financial position and to enable the directors to ensure that the balance sheet and profit and loss account comply with the statutory requirements.
ILN Corporate Group – Establishing a Business Entity Series
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