Unit 8 - The Forms of Business Enterprise

Question 1

Provide 3 Characteristics of a Sole Proprietor

Answer 1

1. He is the single owner.
2. He gets all the profit, but equally carry all the risks.
3. Assets of owner and business is not separate so the owner is liable for all the debt.

Question 2

What is the maximum amount of people allowed in a Partnership contract?

Answer 2

20

Question 3

Provide the 3 key elements of the ESSENTIALIA of a PARTNERSHIP CONTRACT.

Answer 3

1. A contribution by each partner
2. The object of making a profit is for it to be shared among the partners.
3. Business must be conducted for the joint benefit of the partners.

Question 4

Provide 6 common key elements of the Naturalia to a partnership contract.

Answer 4

1. Mutual Mandate - partners may act individually, within the scope of the business, and conclude contracts that legally bind the partners.
2. Proportion in which the net profit is shared - shared according to there contribution.
3. It is there obligation to share in the net loss according to the agreement between them.
4. The proportions in which the net loss will be shared.
5. The proportions in which assets will be divided upon dissolution.
6. The proportion in which the partners are co-owners of the assets of the partnership.

Question 5

What is the characteristics of a company.

Answer 5

1. it is a legal personality/ Juristic person

2. it has a perpetual succession.

Question 6

The Constitution of a Company is made up of which documents?

Answer 6

1. Memorandum of association - governs external relationships
2. Articles of association - governs internal relationships.

These are public documents and need to be available for public inspection.

Question 7

How many members allowed in Public Company “Ltd”?

Answer 7

7

Question 8

How many members allowed in Private Company “(Pty) Ltd”?

Answer 8

1-50 members

Question 9

What are the Principal organs of a company?

Answer 9

1. General meeting of members

2. Board of directors.

Question 10

How many directors are required in a Public Company vs a Private Company

Answer 10

• Public Company must have at least 2

* Private Company must have at least 1

Question 11

What is meant by the Doctrine of Constructive Notice?

Answer 11

This applies to a company who’s constitutive documents is public knowledge. Thus, when concluding contract, these documents confirm who has the authority to conclude a contract on the company’s behalf.

Eg. if a director, without authority, concludes a contract on a company’s behalf, the company will not be held liable as public documents was available for confirmation.

However, this doctrine does not apply to Close Corporations as their documents are not public knowledge.

Question 12

What is the maximum amount of members allowed in a Close Corporation?

Answer 12

no more than 10.