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Flashcards in Business Organisations Deck (26)
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1
Q

What does it mean for a business to be a Sole Proprietorship Business?

A
  1. Business is carried out by one person

2. The business is not a separate legal entity

2
Q

What does it mean for a business to be in a partnership?

A
  1. More than one working together in common view of profit.
  2. Jointly owning property or gross returns not necessarily partners
  3. Sharing of net profits imply partnership
3
Q

Under partnership, what is considered property?

A
  1. Equipment
  2. Stocks in trade
  3. Good will
  4. Rights (Trade mark)
4
Q

Under partnership, can a partner use it for individual need unconnected to the partnership business?

A

No, if one partner misappropriates partnership property, partners may be able to sue him.

5
Q

Under partnership, are profits and losses always shared equally?

A

Yes, even if the contribution is unequal. If partners do not wish to share the profits and losses equally, they should state it explicitly in the partnership agreement.

6
Q

Under partnership, do firms have to indemnify every partner?

A

Yes, after a partner makes a purchase, firms have to reimburse the partner.

7
Q

Under partnership, if partner A contributes more than partner B, does it mean that partner B has less rights to manage the company?

A

No, every partners have equal rights to take part in the management.

8
Q

Under partnership, to make a decision for ordinary matters how many partners need to agree?

A

Majority of the partnership

9
Q

Under partnership, to change the nature of the business how many partners need to agree?

A

All of the partners.

10
Q

Under partnership, are partners entitled to remuneration for their service?

A

No, every partner is not entitled to any remuneration for their service because there is a distribution of profit. They should not assume they will also be paid a regular salary.

11
Q

Under partnership, how does a firm expel a partner?

A

No majority of members can expel a partner, even if contract allows so, likely to apply to court to dissolve the partnership.

12
Q

Under partnership, can a partner be in a competing business with the same nature?

A

Yes, with consent of the partners. However, if do not have consent, the partner will be accountable for all the profits made and derived.

13
Q

Under partnership, can a partner be in a competing business with the same nature?

A

Yes, with consent of the partners. However, if do not have consent, the partner will be accountable for all the profits made and derived.

14
Q

What is a company?

A

A company is an organisation set up pursuant to the company act.

15
Q

Under company, what does it mean to be a separate legal entity?

A

This means that:

  1. The company can own property under its name.
  2. The personal asset of the company/owner cannot be seized should the other be in debt.
16
Q

Under company, what are the exceptions that the debt belongs to the member?

A
  1. The company is held with the intention to defraud creditors or any fraudulent purpose
  2. If a person incur debt on behalf of the company without reasonable or probable expectation of the debt being settled.
17
Q

Under company, the proper person to take action to the court is the company. What are the exceptions that the minorities and members can take action to the court?

A
  1. If the majority of the company committed some fraud and use its power against the minority
  2. A member can commence, if the court allow it considering the company’s interest that such action should be brought.
18
Q

What does perpetual succession mean?

A

Even if directors die or become bankrupt, the company continues until liquidated.

19
Q

What are the types of company?

A
  1. Limited by shares
  2. Limited by guarantee
  3. “Unlimited”
  4. Public
  5. Private
20
Q

What does it mean to be a public company?

A
  1. Transfer-ability of shares is not restricted

2. There are more than 50 people

21
Q

What does it mean to be a private company?

A
  1. There is restrict of transferability of shares

2. There are no more than 50 people

22
Q

How does can a private company be classified as “exempt”?

A
  1. Less than 20 members

2. All shared capital are held by natural person

23
Q

What are the similarities with a partnership and limited liability partnership?

A
  1. Entitled to equal share of profit
  2. Indemnify each partner
  3. Take part in management
  4. Not entitled for remuneration
  5. Decision are made by majority
    6 Accountable for any benefit for using property of LLP
24
Q

What are the similarities with a company and a limited liability partnership?

A
  1. Separate entity from partners
  2. Perpetual succession
  3. Can sue and can be sued in its own name
  4. Can acquire own and hold movable and immovable property
  5. Not personally liable
25
Q

In limited liability partnership, is it true that the all members have equal rights to take part in the management regardless of how much they contribute?

A

Yes. Just like in partnership, the partners have equal rights to take part in the management.

26
Q

In limited liability, it is true that it acquire, own and hold both ________ and _________ property.

A

movable and immovable