1.3.1 Forms of Practice

Question 1

Sole Practitioner:
Legal Nature
Advantages
Disadvantages

Answer 1

1

Question 2

Partnership: 7
Legal Nature
Advantages
Disadvantages

Answer 2

A
Companies act limit the number of partners to 20 max and 2 min
B
No perpetual succession. When a partner dies or retires, the partnership comes to an end.
C
The names of all partners should be shown on Letterhead.
D
Partners are all jointly and severely liable.
E
Liability is severe and personal assets are at risk
F
Decision making by all partners.
G
Medium sized partnerships usually give portfolios to certain members to make running the partnership easier.

Question 3

Close Corporation: 9
Legal Nature
Advantages
Disadvantages

Answer 3

A
Set up to be ideal for small business like one or two people
B
Founding statement to be lodged with Registrar
C
Document must identify accounting Officer to be sure that books are done properly.
D
MAX members not exceed 10
E
Member are not personally liable for debts of a CC. This is an advantage
F
A CC may own fixed property
G
All members manage in trust
H
A full Audit is not required but adequate accounting records are to be maintained.
I
Members are registered as provisional tax payers.

Question 4

Company:
Legal Nature
Advantages
Disadvantages

Answer 4

A
Registrar of Companies must issue a certificate before that Company can do business.
B
The Directors effectively guarantee the operating Capital
C
MAX 50 MIN 1 shareholder.
D
Large companies might have executive committee to make running easier.
E
Shareholders are not individually liable. Liability is limited.
F
Company is a continuing legal persone, therefore perpetual succession, and a full scope annual audit is required.
G
All Shareholders does not need to be active participants.
H
Benefits
Directors could be non architectural
Directors as salaried persons are then eligible for pension funds etc.
A company may retain undistributed profit to bolster bad years
J
Directors are not personally liable.

Question 5

Multi disciplinary:
Legal Nature
Advantages
Disadvantages

Answer 5

1

Question 6

Incorporated Company

Answer 6

A
Intended for professions
B
All Directors must be active on a day to day basis
C
MAX 50 MIN 1 Director.
D
Directors are jointly and severely liable.
E
Directors are paid salaries and partake in profits.
F
On retirement, the exiting directors shares are redistributed to the new one or the rest as per the company articles of agreement.
G
Large Inc’s have an executive with other directors attending special meetings through the year.
H
Inc has continued legal persona.
I
Full scope audit is required.