CHAPTER 6: BUSINESS ORGANIZATION Flashcards
Sole Proprietorship Act
Registration of Businesses Act 1956
The owner and business itself are one
Sole proprietorship
His liability to the business’ creditors is also unlimited
Sole proprietorship
He may use the assets for personal purposes and use personal assets to meet businesses obligations
Sole proprietorship
______ may transfer his business to someone else, if he wishes so
Sole proprietorship
advantages of proprietorship
- easiest and least expensive
- owner is in complete control
- receives all income generated
- easy to dissolve
- not subjected to many rules and regulations
disadvantages of sole proprietorship
- capital is limited
- unlimited liability
- both personal and business assets are at risk
- business will dissolve if owner passed away. if someone want to continue, they’ve to re-registered
two persons get together to carry on business with a view of profit
Partnership
maximum number of partners is 20 excepts professional has no limits
partnership
must registered under the (Registration of Business Act 1956) and (Partnership Act 1961)
Partnership
may be formed by an oral or a written agreement
partnership
each partner is an agent and principal
partnership
all ______ generally allowed to take part in the management of the business
partnership
all assets brought into ______ are _______ property
partnership
All _______ are liable for the debts and obligations. If the firm assets are not enough, ______ must contribute to pay off the debts
partnership
A _________ is not an independent legal entity
partnership
______ may withdraw the capital that they contribute to the partnership
partnership
a ______ who wishes to transfer his status to another need other’s consent
partnership
elements of partnership (6)
- two person and more
- there must be an agreement, expressed orally/ writing/ impliedly
- business must exist
- must be carried on in common
- carried out with intention of making profits
- each partner is an agent & principal
sharing of gross return does not of itself create a ______
partnership
a person who actively participates in the management of the business
active partner
a person who takes no active part in the management
sleeping/ dormant partner
not a partner but will be liable for debt of the partner as consequence of the principles of ‘holding out’ (for causing people to believe he is a partner)
quasi partner
a _____ may be formed with or without a written agreement
partnership
general rule to enter into an agreement
1) 18+
2) sound mind
3) has not been disqualified from contracting under any law to which he is subject
general rule to enter into an agreement
1) 18+
2) sound mind
3) has not been disqualified from contracting under any law to which he is subject
Relationship between partners: all partners are bound to render true accounts and full information of all things
section 30
Relationship between partners: partner must not make a profit for himself by making use of his position as a partner
section 31
Relationship between partners: if a partner without consent of the other partner, he must take account
section 32
dissolution of partnership (7)
1) dissolution by agreement
2) dissolution by operation of law
3) dissolution by notice
4) dissolution by supervening illegality
5) dissolution by death
6) dissolution by charging on shares
7) dissolution by the court
dissolution by court (6)
1) mental incapacity
2) permanent incapacity
3) prejudicial conduct
4) willful or persistent
5) can only be carried at a loss
6) complete communication breakdown
company act
companies act 2016
types of company
1) company limited by shares
2) company limited by guarantee
3) unlimited company
tan teck hee v cheng tian peng: 25 members partnership
two persons constitute a partnership not exceeded 20 people
ratna ammal & anor. v tan chow soo
agreement between persons, expressed orally/ in writing/ or implied from the action
ratna ammal & anor. v tan chow soo
agreement between persons, expressed orally/ in writing/ or implied from the action
keith spicer ltd v mansell
partnership exist
chooi siew cheong v lucky height development
business must be carried in common
soo hood beng v khoo chye neo
business for profit
section 4 partnership act: what is not considered as partnership? (3)
1) joint tenancy and tenancy in common
2) sharing of gross returns
3) receipt of share net profits
section 4(c) receipt of share net profits (5)
1) repayment of loan out of profits
2) payment or remuneration to servant out of profit
3) payment of annuity to widow or child
4) repayment of interest on a loan out of profits
5) sale of goodwill
