Types of Companies

Question 1

What are the 3 types of business one may enter into?

Answer 1

1. Sole Proprietorship
2. Partnership
3. Company

Question 2

1. Sole Proprietorship

Answer 2

• a type of unincorporated entity that it owned by one individuals only. It is the simplest form of business.
• the individual operates as a ‘natural person’ either under their own name or another.
• They will be responsible for all the losses that occurred and take responsibility.
• If the business becomes insolvent or bankrupt, the owner’s personal assets may be attached to the creditor.

Question 3

2. Partnership

Answer 3

• Occurs when 2 or more persons but not more than 20 come together to form a business.
• a partnership contract is entered into which regulates the partnership.
• Both partners will have to discuss how profits and losses will be shared.

Question 4

3. Company

Answer 4

• if the business expands, it would be advised to create a company.

Question 5

Differences between Sequestration and Liquidation

Answer 5

1. Sequestration
   - occurs when a natural person is declared bankrupt.
   - the natural person’s estate is sequestrated.
   - Voluntary conduct is when the natural person approaches the court to declare bankruptcy and Compulsory conduct is when the creditor approaches the court to declare the natural person bankrupt.
   - when an estate is sequestrated, the trustees appointed by the court runs the insolvent estate and administer the estate which are sold off to satisfy the debt.
   - the sequestration order gives the effect of limited capacity to act.
2. Liquidation
   - occurs when a juristic person is declared bankrupt.