ExpertHard2 marksMultiple Choice
ACCA · Question 52 · Corporate and Business Law
SCENARIO 3: HarvestDrone Ltd and CropYield PLC wish to form a joint venture to develop AI-driven tractors. They want the new entity to have limited liability, but they want to maintain absolute secrecy over the joint venture's financial accounts, preventing competitors from seeing their R&D spend.
Which business structure should they choose to achieve BOTH limited liability and complete financial secrecy?
SCENARIO 3: HarvestDrone Ltd and CropYield PLC wish to form a joint venture to develop AI-driven tractors. They want the new entity to have limited liability, but they want to maintain absolute secrecy over the joint venture's financial accounts, preventing competitors from seeing their R&D spend.
Which business structure should they choose to achieve BOTH limited liability and complete financial secrecy?
Answer options:
A.
A Private Limited Company (Ltd).
B.
A Limited Liability Partnership (LLP).
C.
A General Partnership.
D.
Neither; it is impossible to have both statutory limited liability and complete financial secrecy in the UK.
How to approach this question
Evaluate the trade-off between limited liability and public disclosure in UK business structures.
Full Answer
D.Neither; it is impossible to have both statutory limited liability and complete financial secrecy in the UK.✓ Correct
In UK corporate law, there is a fundamental trade-off. To obtain the benefit of limited liability (protecting personal assets from business debts), an entity (like a Ltd, PLC, or LLP) must register at Companies House and file annual financial accounts, making them a matter of public record. A traditional general partnership offers financial secrecy but imposes unlimited personal liability on the partners. You cannot have both.
Common mistakes
Assuming an LLP offers the secrecy of a traditional partnership.
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