Unincorporated Business Organisations and the Fiduciary Duties of a Promoter

CASE LAW AND STATUTORY PROVISIONS
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Question One. This section is to examine two types of unincorporated business organizations, advantages and disadvantages of unincorporated business organizations, as well as the differences between the two types of businesses. Unincorporated business organization is a company that lacks legal registration as a business with the relevant government authorities.  This type of business is different from incorporated type of business which has independent legal existence. Individual owners of unincorporated business do not have to register their companies because technically, if they are not one. There are various types of unincorporated business organizations. The two types of unincorporated business organizations to be discussed in this essay are sole traders and partnerships. (i)                             Sole traders/proprietorships Sole traders are self-employed individuals who own and run the companies at a personal (individual) level. These businesses don’t have any legal identity separate to their owners, resulting to the idea of a sole trader, one becomes the business (Larson n.d.).  As a sole proprietor, you have full control over your company, its assets and profits after tax. Additionally, this type of business provides versatility, comparative simplicity and several advantages. The sole proprietor gets all profits after taxation and there is unlimited responsibility for all losses and debts. In this kind of business, a sole trader can use a trade name rather than its legal name. There are various characteristics of sole traders. These are: (1) Lack shareholders to invest capital. Funding for the business is raised individually by the sole trader. (2) No requirement to register the business with company’s house.  (3) Directors are not required to run the company. Instead, a single trader is necessary.  (4). Lack multiple partners. (ii)              Partnerships A partnership is simply a formal arrangement and agreement between two or more groups to operate, manage, and initiate a business with the aim of sharing profits. A partnership can be a business initiative taken jointly by several parties. The parties may include private individuals, non-profits enterprises, governments, or businesses. Some partnerships have varied goals. A partnership is classified into three categories: limited liability partnership, general partnership, and limited partnership. General partnership entails all parties in the arrangement sharing financial and legal liability equally. Everybody in the partnership has individual responsibility for the debts the partnership takes. Also, the members of the partnership share profits equally, in line with the partnership agreement.   Limited partnership is connected to or originates from general and limited liability partnerships. In this partnership, at least a single partner must be a general partner and have absolute personal liability for debts of the partnership. Also, at least another on...