BUS205: (Company and Tort Law) Define a limited liability partnership and a private limited company.

Module / Subject / School:

BUS205: (Company and Tort Law) 

Singapore University of Social Sciences

Requirements: 

Question 1

David and Ernest currently run a successful marketing consultancy business as a limited liability partnership. They provide a wide range of marketing and sales consulting services to clients across various industries. David and Ernest now wish to reorganise the business and to incorporate the business as a private limited company instead. At the same time, they wish to take this opportunity to bring in a long-time mutual friend, Frankie, who had previously been working informally with them.

The trio intend to name the company as “Modern Consulting Pte Ltd” (MCPL). All three intend to be directors of MCPL upon incorporation and to run and manage the proposed company together. David, Ernest and Frankie will hold 50%, 35% and 15% of the company’s shares,

respectively. They will be investing their capital in MCPL on the understanding that business profits will be re-invested for the expansion of the company and growth. This will mean that dividends are unlikely but that each will earn his living by working for the company as a director.

As the trio have been good friends since their university days, they feel there is no need to have a separate shareholders’ agreement as they can go into business together based on a relationship of mutual trust and confidence. The trio wish to minimise the hassle of paperwork arising from the setting up of MCPL and will adopt the model constitution as annexed in the First Schedule of the Companies (Model Constitutions) Regulations 2015.

As Frankie will hold a relatively small amount of shareholding in MCPL, he wishes to protect his interests and ensure that he will be treated fairly. He also wants to better understand what to expect in this business relationship that he is entering. Frankie has come to you for advice.

(a) Define a limited liability partnership and a private limited company. Discuss how a private limited company differs from a limited liability partnership, in terms of the extent to which shareholders/partners’ liability for the debts of the business will be limited; the right to be involved in the management of the business; and the audit and annual filing requirements to which the business would be subject. (50 marks)

(b) Explain the right to fair treatment and whether Frankie can successfully apply for an oppression remedy if David and Ernest were to subsequently fall out with him and pass a resolution at a shareholders’ meeting to remove him from the board of directors of MCPL. (35 marks)

(c) Outline the other shareholders’ rights that Frankie may have. (15 marks)

Cite relevant statutory provisions and/or case law to support your answer.

What we score:

80%

Our Writer’s Comment 

This assignment is designed to assess students’ understanding of business practices.

To secure an A+ grade, adhere to these guidelines and make sure your work aligns with the grading criteria:

Question 1(a): Defining a Limited Liability Partnership (LLP) and a Private Limited Company (50 marks)

In this part, you need to define and compare a limited liability partnership (LLP) and a private limited company (Pte Ltd). Here’s a step-by-step approach:

1. Definition of LLP:
   • Explain that an LLP is a business structure that combines the features of a partnership and a company.
   • Highlight that LLP partners enjoy limited liability, meaning they are not personally liable for the business’s debts beyond their initial investment.
2. Definition of Private Limited Company (Pte Ltd):
   • Describe a private limited company as a separate legal entity that can own property, enter contracts, and sue or be sued in its own name.
   • Shareholders enjoy limited liability, similar to an LLP, but there are differences in management and filing obligations.
3. Comparison:
   • Liability: Explain that in both structures, liability is limited. However, in a Pte Ltd, liability is generally restricted to the shares held, whereas in an LLP, the partners are shielded from personal liability except in cases of wrongful acts.
   • Management: Discuss how partners in an LLP can manage the business directly, while in a Pte Ltd, management is handled by directors who may not necessarily be shareholders.
   • Filing Requirements: Pte Ltd companies have more stringent audit and annual filing requirementscompared to LLPs. Include the relevant provisions from the Companies Act regarding audits and filings for Pte Ltds.

   Tip: Make sure to use statutory provisions from the Limited Liability Partnerships Act and Companies Actto support your points. Explain why David, Ernest, and Frankie’s decision to move from an LLP to a Pte Ltdis significant in terms of these legal differences.

Question 1(b): Oppression Remedy and Fair Treatment for Frankie (35 marks)

Here, you need to explain shareholders’ rights to fair treatment and whether Frankie can successfully apply for an oppression remedy under the Companies Act.

1. Frankie’s Situation:
   • Start by explaining Frankie’s position as a minority shareholder with 15% shares in MCPL. Minority shareholders are particularly vulnerable to oppression, especially if major shareholders (David and Ernest) act in ways that exclude or harm his interests.
2. Oppression Remedy:
   • Discuss Section 216 of the Companies Act, which allows minority shareholders to seek a remedy if they feel their rights have been oppressed or unfairly prejudiced. Examples of oppressive actions include exclusion from management or passing resolutions that benefit the majority at the expense of the minority.
   • Explain that if David and Ernest were to remove Frankie from the board of directors, this could be seen as oppressive if it’s done without just cause or if it violates any implied or express agreements.
3. Frankie’s Legal Standing:
   • Assess whether Frankie could successfully claim oppression based on his expectations as a minority shareholder and the circumstances. If the resolution to remove him is unfair and prejudicial, he may have a strong case.
   • Provide examples from case law where similar minority shareholders were protected under Section 216.

Tip: Use relevant case law to support your analysis. Cases such as Over & Over Ltd v Bonvests Holdings Ltd can provide insight into how courts handle oppression claims.

Question 1(c): Other Shareholders’ Rights for Frankie (15 marks)

In this section, you need to outline additional rights that Frankie has as a shareholder in a private limited company.

1. Voting Rights:
   • Mention Frankie’s right to vote at general meetings, particularly on matters such as the appointment and removal of directors. His voting power, however, is proportionate to his shareholding (15%).
2. Right to Dividends:
   • Explain that although the trio has agreed to reinvest profits, Frankie still holds the right to receive dividends when declared by the company.
3. Access to Company Information:
   • Highlight that under the Companies Act, shareholders have the right to inspect company books and records and receive annual financial statements, which ensures transparency.
4. Pre-Emptive Rights:
   • If MCPL issues new shares, Frankie may have a pre-emptive right to purchase new shares before they are offered to outsiders, ensuring his stake is not diluted.

Tip: Include references to the Companies Act and case law to support your explanation of each right. Make sure to connect each right to Frankie’s role as a minority shareholder.

General Tips to Improve Your Score:

1. Use Statutory Provisions and Case Law: Wherever possible, cite the relevant sections of the Companies Actor Limited Liability Partnerships Act. Cases such as Tan Guan Eng v Heng Holdings or Over & Over Ltd v Bonvests Holdings Ltd will demonstrate your understanding of legal precedent.
2. Provide Clear and Structured Answers: Make sure to clearly separate each part of your answer with headings (e.g., “Liability of Partners vs. Shareholders,” “Oppression Remedy for Frankie”). This improves readability and helps the examiner follow your argument.
3. Incorporate Practical Examples: Use hypothetical examples or real-life case studies to illustrate your points. For example, explain how decisions like removing Frankie from the board could be seen as oppressive based on past judgments.
4. Be Concise but Thorough: You have limited word counts for each question, so make sure your answers are focused and relevant. Avoid going off-topic, but ensure you provide enough detail to fully explain each legal concept.

By structuring your answers clearly, using more statutory references, and adding case law, you’ll demonstrate a deeper understanding of company and tort law and improve your score in future assignments!

Why are we trusted by Singaporean part-time students?

1. Assurance of Academic Success: We are confident in the quality of our work so much so that we offer a 200% money-back guarantee if our work is not of sure-pass quality. This showcases our unwavering commitment to delivering exceptional essays that consistently meet the highest academic standards.
2. High Ratings on Google: Our commitment to excellence is reflected in the positive ratings we consistently receive from students. With an impressive 4.6 rating on Google, students can rely on the feedback shared by others who have had successful experiences with our service. These positive reviews further reinforce the trust students can place in the quality of our work and the positive outcomes we deliver.
3. Strict Confidentiality: We prioritize the confidentiality and privacy of our clients. Students can trust that their personal information and engagement with our service will be treated with the utmost confidentiality and security. We never disclose any client details to third parties.
4. Valuable Testimonials: We are proud to have received numerous testimonials from hundreds of satisfied students who have benefited from our services. These testimonials serve as a testament to the trust and satisfaction students place in our essay writing service. The positive feedback highlights the quality of our work and the positive impact we have had on our clients’ academic journeys.

Sample Assignment

We have done well for this piece, but are unfortunately unable to share with you. Why not have us work on a model assignment for you instead? You can know more about the service here.