Forms of ownership: To understand the different forms of ownership, the following concepts must be understood: Legal personality: indicates whether or not the owner and the business are separate legal • entities. If the business has legal personality, the owner and the business are two separate entities Liability: indicates whether the owners of a business will be held personally liable for the • business’ debts. When liability is unlimited, owners’ personal assets may be sold to cover the business’ debts. With limited liability the owners are not held liable for the debts of the business Continuity: refers to the lifespan of the business. • CRITERIA SOLE PROPRIETORSHIP PARTNERSHIP CLOSE CORPORATION PRIVATE COMPANY AT LEAST 1 50 1 DIRECTOR. – MEMBERS 1 2 to 20 partners 1 10 members – MEMBERS (SHAREHOLDERS) (1) YES. (1) NO (1) NO. (1) YES. (1) LEGAL (2) LIMITED LIABILITY – (2) UNLIMITED (2) JOINTLY AND SEVERLY (2) LIMITED LIABILITY A –IS PERSONALITY LEGAL PERSON, SEPARATE LIABLE FOR THE PARTNERS ARE LEGAL PERSON, SEPARATE FROM LIABILITY LIABILITY – – FROM SHAREHOLDERS AND ALL RISKS, AND DEBTS JOINTLY LIABLE FOR ALL RISKS, ITS MEMBERS. THE MEMBERS DIRECTORS. SHAREHOLDERS OF THE ENTERPRISE IN AND DEBTS OF THE ENTERPRISE ARE NOT PERSONALLY LIABLE ARE NOT PERSONALLY LIABLE (2) LIABILITY HIS PERSONAL IN THEIR PERSONAL FOR THE DEBTS OF THE FOR THE DEBTS OF THE CAPACITY CAPACITIES. ENTERPRISE. ENTERPRISE. (PTY) LTD. PROPRIETORY LEGAL NAME NONE NONE MUST END IN CC LIMITED LIMITED TO THE LIFE OF THE PARTNERSHIP. THE DEATH OR LIFESPAN / LIMITED TO THE LIFE WITHDRAWAL OF PARTNER UNLIMITED TO THE LIFE OF THE UNLIMITED LIFESPAN. CONTINUITY OF THE OWNER DISSOLVES THE PARTNERSHIP, MEMBERS. UNLESS OVERCOME BY AGREEMENT. HIGH DEGREE OF LEGAL EASE OF SIMPLE EASY RELATIVE EASY REGULATION MAKING FORMATION FORMATION COMPLICATED GOOD ABILITY TO ACCESS ABILITY TO ACCESS CAPITAL. BETTER ABILITY TO ACCESS LIMITED ACCESS TO CAPITAL LOAN CAPITAL CAPITAL MORE PEOPLE CONTRIBUTE CAPITAL. MEMBERS CONTRIBUTE CAPITAL. LOANS BASED EASIER TO COME BY DUE TO ACQUISITION SECURITY TO LOANS BASED ON TOWARDS THE ENTERPRISE, ON PERSONAL REGULATION OF CAPACITY PERSONAL LOAN CAPITAL EASIER TO CREDITWORTHINESS. COMPANIES AND CREDITWORTHINESS. OBTAIN. DISCLOSURE.
Forms of ownership: To understand the different forms of ownership, the following concepts must be understood: • Legal personality: indicates whether or not the owner and the business are separate legal entities. If the business has legal personality, the owner and the business are two separate entities • Liability: indicates whether the owners of a business will be held personally liable for the business’ debts. When liability is unlimited, owners’ personal assets may be sold to cover the business’ debts. With limited liability the owners are not held liable for the debts of the business • Continuity: refers to the lifespan of the business. CRITERIA SOLE PROPRIETORSHIP PARTNERSHIP CLOSE CORPORATION PRIVATE COMPANY MEMBERS 1 2 to 20 partners 1 – 10 members AT LEAST 1 DIRECTOR. 1 – 50 MEMBERS (SHAREHOLDERS) (1) LEGAL PERSONALITY (2) LIABILITY (1) NO (2) UNLIMITED LIABILITY – LIABLE FOR ALL RISKS, AND DEBTS OF THE ENTERPRISE IN HIS PERSONAL CAPACITY (1) NO. (2) JOINTLY AND SEVERLY LIABILITY – THE PARTNERS ARE JOINTLY LIABLE FOR ALL RISKS, AND DEBTS OF THE ENTERPRISE IN THEIR PERSONAL CAPACITIES. (1) YES. (2) LIMITED LIABILITY –IS A LEGAL PERSON, SEPARATE FROM ITS MEMBERS. THE MEMBERS ARE NOT PERSONALLY LIABLE FOR THE DEBTS OF THE ENTERPRISE. (1) YES. (2) LIMITED LIABILITY – LEGAL PERSON, SEPARATE FROM SHAREHOLDERS AND DIRECTORS. SHAREHOLDERS ARE NOT PERSONALLY LIABLE FOR THE DEBTS OF THE ENTERPRISE. LEGAL NAME NONE NONE MUST END IN CC (PTY) LTD. PROPRIETORY LIMITED LIFESPAN / CONTINUITY LIMITED TO THE LIFE OF THE OWNER LIMITED TO THE LIFE OF THE PARTNERSHIP. THE DEATH OR WITHDRAWAL OF PARTNER DISSOLVES THE PARTNERSHIP, UNLESS OVERCOME BY AGREEMENT. UNLIMITED TO THE LIFE OF THE MEMBERS. UNLIMITED LIFESPAN. EASE OF FORMATION SIMPLE EASY RELATIVE EASY HIGH DEGREE OF LEGAL REGULATION MAKING FORMATION COMPLICATED CAPITAL ACQUISITION CAPACITY LIMITED ACCESS TO CAPITAL. LOANS BASED ON PERSONAL CREDITWORTHINESS. ABILITY TO ACCESS CAPITAL. MORE PEOPLE CONTRIBUTE SECURITY TO LOANS BASED ON PERSONAL CREDITWORTHINESS. BETTER ABILITY TO ACCESS CAPITAL. MEMBERS CONTRIBUTE TOWARDS THE ENTERPRISE, LOAN CAPITAL EASIER TO OBTAIN. GOOD ABILITY TO ACCESS CAPITAL LOAN CAPITAL EASIER TO COME BY DUE TO REGULATION OF COMPANIES AND DISCLOSURE.