Acca financial Accounting (FA) Study Text ac ca (FA)

Transferable shares

 

Shares in a limited company can usually be transferred without the 

consent of the other shareholders. In the absence of agreement to 

the contrary, a new partner cannot be introduced into a firm without 

the consent of all existing partners. 

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Suing and being sued

 

As a separate legal person, a limited company can sue and be sued 

in its own name. Judgements relating to companies do not affect the 

members personally. 

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Security for loans

 

A company has greater scope for raising loans and may secure 

them with floating charges. A floating charge is a mortgage over the 

constantly fluctuating assets of a company providing security for the 

lender of money to a company. It does not prevent the company 

dealing with the assets in the ordinary course of business. Such a 

charge is useful when a company has no non-current assets such 

as land, but does have large and valuable inventories. 

Generally, the law does not permit partnerships or individuals to 

secure loans with a floating charge. 

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Taxation

 

Because a company is legally separated from its shareholders, it is 

taxed separately from its shareholders. Partners and sole traders 

are personally liable for income tax on the profits made by their 

business. 

 

 

 

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