Professional Issues in

Information Technology
What is an Organisation?
 Definition
• An Organisation is a group of people
working together in a formal way
• Commercial
• Governmental
• Charity (not for profit)
 Commercial Organisations
Types include
• Sole trader
• Partnership
• Cooperative
• Limited Company
 Sole Trader
• A sole trader is personally liable for all
of the debts of the business
• No formal requirements
 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
 Cooperatives
• Not common in the IT area
• Mainly agriculture.
 Limited Company 1
• Most common arrangement
 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
 Limited Company 3
Types of company
• Limited Company
• Public Limited Company
 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
 Limited Company 5
• Must produce and annual report
• Must produce and annual accounts
 Constitution of a Limited
Company
This requires
1. Memorandum of Association
2. Articles of Association
 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
 Declaration of Association
• Often a legal agreement to own a
certain number of shares
• Complex legal area – outside syllabus
requirements
 Shareholders Agreement
• This is not a public agreements
• Agreement between shareholders on
matters of importance to the company
 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 the
interest of employees and shareholders
 Directors 2
• Must act in Good Faith for the benefit of
the company
• Directors must exercise skill and care in
carrying out their duties that might be
expected from someone of their skill
and experience
 Directors 3
• Directors must avoid conflicts of interest
– matters regarding votes may require
director to abstain.
 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)
 Directors 5
• Executive Directors
Usually senior employees responsible for
specific areas of the business
• Non-Executive Directors
Act in an advisory capacity only
 Company Secretary
• Every company must have a company
secretary and is the person legally
responsible for submitting required
documents to company house
(annually)
 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