L2 - Forms of Business Ownerships Flashcards
What is sole proprietorship (definition)
Enterprise or business venture by one single individual
What are the functions (4) of the Registraire des Entreprises?
-Keeping and preserving the register
-Registering the businesses
-Conferring legal existence
-Optimizing the reliability of the information in the register with reasonable measures
These are not limited to ALPE
What does ALPE mean
Act respecting the Legal Publicity of Entreprises
What is the law regarding surname and name used for the business
(ALPE s.21 (1))
It’s mandatory to register if a business name is used, but optional if surname and name are used (still recommended)
What are the exception for the rule regarding surnames and names of the business?
ALPE s.21(2)
Tobacco Retail Sales Outlet and Artificial Tanning Salon must register, even if it’s the name and surname that are used
What is the law regarding artistic, literary, or cultural activity?
If the pseudonym is used in that pursuit, the person is NOT required to register
What are the requirements regarding the name selection in Québec? (9)
- Must be in French (with some exceptions)
- Law may reserve a name for someone else
- Can’t be immoral, obscene, or scandalous
- Can’t incorrectly state the registrant’s juridical form
- Can’t falsely suggest that the registrant is a non-profit group
- Can’t falsely suggest that the registrant is related to public authority
- Can’t falsely suggest that the registrant is related to another person, trust, partnership, etc
- Can’t be confusingly similar to a name in Québec used by another person, trust, partnership, etc
- Can’t be misleading in any other manner
When must the declaration of registration be filed? And what is the exception?
No more than 60 days after the date on which it became compulsory
Exception for Tobacco Retail Sales Outlet and Artificial Tanning Salon, for which it is 30 days
When must the declaration of registration be updated?
Annually, even if there’s no changes
What is the liability for a sole proprietor?
Law doesn’t separate him from the business, he has unlimited liability for all debts
What is the ownership rate of a sole proprietorship
100%
How are the profits “shared” in a sole proprietorship
The individual is entitled to all profits, and they are taxed as personal income
How is managerial control defined in a sole proprietorship
The individual has total managerial control over business decisions
How does transfer work under a sole proprietorship
Ownership CANNOT be transferred.
However, assets can be sold
When is a sole proprietorship terminated?
When the owner dies, or decides to put an end to it by filing a cancellation declaration
What are the advantages of a sole proprietorship (4)
- Easy to start up
- Low start up costs
- Easy to dissolve
- Complete control
What are the disadvantages of a sole proprietorship (4)
- Unlimited liability
- Lack of continuity
- Financing difficulties
- Goodwill difficulties
What is the partnership definition
Enterprise or business venture owned by 2 or more individuals
What does the law state regarding liability for partnerships
Unlimited liability for both partners, as law doesn’t distinguish the partners from the business
arts. 1523 and 2221
How is ownership defined in a partnership?
If no specified, it is presumed as equal
However, the partners can decide how it is, and it doesn’t have to be equal
What can be done regarding one partner’s liability?
There’s a possible agreement to remove one partner’s responsibility, but it is not enforceable against creditors
(art. 2203 para 3)
How are profits defined in a partnership?
They are split equally, unless specified otherwise.
NO partner can be excluded from its share of profit
Profits are personal earnings = taxed as such
How is ownership transfer defined for partnerships?
It is possible to do so.
The partners agree on how to deal with each partner’s share of the assets
How is management defined in a partnership
All partners have managerial power, unless stipulated otherwise
It’s possible to hire 3rd party to manage partnership’s affairs
Details should be specified in the partnership agreement
When is a partnership terminated?
With the agreement of partners, death, or bankruptcy
A cancellation declaration must be filed
What are the advantages of a partnership (4)
- Simple Start-Up
- Low Start-up Costs
- Easy to dissolve
- Easier financing
What are the disadvantages of a partnership (4)
- Unlimited liability
- Lack of continuity
- Conflict
- Transfer difficulties
What is the special type of partnership?
Limited Partnership
What is a limited partnership?
Type of partnership for which you have general and special partners.
Special partners are liable to the agreed amount of their contribution, they CANT take part in management decisions, but may give advisory opinions
