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Professional Issues in

Information Technology

What is an Organisation?

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Definition

• An Organisation is a group of people

working together in a formal way

• Commercial

• Governmental

• Charity (not for profit)

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Commercial Organisations

Types include

• Sole trader 

• Partnership

• Cooperative

• Limited Company

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Sole Trader 

• A sole trader is personally liable for all

of the debts of the business

• No formal requirements

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Partnership

• Partnership Act 1890

• Partners are Jointly and Severally liable

for the debts of the business

• Change of ownership may be difficult

• Doctors, Lawyers and Architects often

operate as partnerships as required by

their professional bodies

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Cooperatives

• Not common in the IT area

• Mainly agriculture.

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Limited Company 1

• Most common arrangement

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Limited Company 2

• Unique Corporate Legal identity – the

Company is treated as if it is a legal

person• Ownership is decided by the allocation

of shares

• Shareholders are not responsible for the legal debts of the company

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Limited Company 3

Types of company

• Limited Company

• Public Limited Company

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Limited Company 4

• In return for a companies protected

status it must meet certain obligations

• Must produce annual accounts

• Must produce publicly available

information to Companies House

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Limited Company 5

• Must produce and annual report

• Must produce and annual accounts

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Constitution of a Limited

CompanyThis requires

1. Memorandum of Association

2. Articles of Association

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Memorandum of Association

• Name of the company – this must be

unique

• Country of registration – England &Wales, Wales or Scotland

• Objects of the company

• Liability clause

• Companies authorised share capital

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Declaration of Association

• Often a legal agreement to own a

certain number of shares

• Complex legal area – outside syllabusrequirements

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Shareholders Agreement

• This is not a public agreements

• Agreement between shareholders on

matters of importance to the company

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Directors 1

• Shareholders are required to appoint

directors – day-to-day running of the

company• Legally responsible to both employees

and shareholders

• Directors MUST act with regard to theinterest of employees and shareholders

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Directors 2

• Must act in Good Faith for the benefit of 

the company

• Directors must exercise skill and care incarrying out their duties that might be

expected from someone of their skill

and experience

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Directors 3

• Directors must avoid conflicts of interest

 – matters regarding votes may require

director to abstain.

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Directors 4

Obligations

• Must be aware of companies financial

position

• Production of company annual report

• Ensure that company complies with

provisions of the law (corporate

manslaughter)

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Directors 5

• Executive Directors

Usually senior employees responsible for 

specific areas of the business

• Non-Executive Directors

Act in an advisory capacity only

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Company Secretary

• Every company must have a company

secretary and is the person legally

responsible for submitting requireddocuments to company house

(annually)

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Setting up a company

• Mechanisms include

• Purchase “off the shelf” company

• Create a separate new company

•Register with the Registrar of Companies – cost is about £100