Forms Of Ownership Chapter 5
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Summary
This document provides an overview of different forms of business ownership, including sole proprietorships, partnerships, and companies. It details the characteristics and legal aspects of each type. The summary focuses on the structure, responsibilities, and legal implications related to various business ownership structures in a South African context. Specific legal acts are also mentioned.
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# FORMS OF OWNERSHIP ## Chapter 5 ### Sole Trade - a business that is started and owned by one person - the business is not registered as a separate legal entity - all capital is contributed by one person, all risk is carried by one person - all the profit is received by one person ### Partne...
# FORMS OF OWNERSHIP ## Chapter 5 ### Sole Trade - a business that is started and owned by one person - the business is not registered as a separate legal entity - all capital is contributed by one person, all risk is carried by one person - all the profit is received by one person ### Partnership - a business where 2-20 people become joint owners of the business. - they share capital contributions, profits and losses using a predetermined ratio (partnership agreement) - business is not registered as a legal entity separate from the owners #### Partnership agreement - The agreement defines the terms and conditions agreed upon by partners - Can be entered upon - tacitly (by implication) - verbally - in writing (safest way and highly recommended) ### Companies - legal entity incorporated in terms of Act 71 of 2008 #### Purpose of the Companies Act - encourage entrepreneurship - promote the overall well-being of the South African economy - simplify the process of registering and managing a company - ensure rights and obligations of shareholders and directors are aligned - ensure NPO's are established and managed in an effective way ## Types of Companies ### Private Company - company name ends with (PTY) Ltd. - may not be state owned or sell shares - business that is owned, operated and controlled by a small group of people - shareholders have limited liability and a seperate legal entity from company - company has a legal personality and unlimited continuity. ### Public Company - company name ends with Ltd. - business whose shares are traded on the JSE - shares are freely negotiable or transferable - shareholders have limited liability and a separate legal entity from company - company has a legal personality and unlimited continuity.
