Management Old


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Management Old

  1. 1. <ul><li>There are several types of ownerships, however four are mainly used and popular in South Africa: </li></ul>PARTNERSHIP PRIVATE COMPANY SOLE PROPRIETOR CLOSE CORPORATION (CC)
  2. 2.   Sole Trader Partnership Close Corporation Private Company Name No specific requirements No specific requirements CC Propriety Limited No. of Owners 1 2-20 1-10 1-50 Name of Owners Owner Partners Members Shareholders Liability Unlimited Unlimited Limited Limited Continuity Limited Unlimited Unlimited Unlimited Managed By Owner (does not have to physically be present) All/some partners All/some members At least 1 director elected by shareholders Capital Contributed by the owner Contributed or loans by partners Contributed or borrowed by members A maximum of 50 selected shareholders contribute the capital Formation No requirements Partnership Agreement (P.A)/ Articles Founding Statement Memorandum & Articles of Association Payment to Owners All profits paid to the owner Divided between partners according to the Partnership Agreement Paid according to % interest held by each member Dividends per share depending on no. of shares Availability of Financial Information Only available to the owner Only available to the partners Only available to members of the CC Only available to shareholders & perspective shareholders Type of Taxation Taxed on owners personal capacity Taxed on partners personal capacity Pays Company Tax Pays Company Tax
  3. 3. <ul><li>A partnership is a type of business formed by people who intend on making and sharing their profits. It can be defined as a relationship based on an agreement between two or more persons who contribute towards their business with the objective of making a profit and sharing it between them. A partnership must have between two and 20 partners. </li></ul>PARTNERSHIP
  4. 4. <ul><li>Cheap to set up and It is easy to organize </li></ul><ul><li>Statutory requirements are minimal </li></ul><ul><li>Managerial skills of the partners are </li></ul><ul><li>Combined </li></ul><ul><li>It has greater financial strength and tax advantages </li></ul><ul><li>Each partner has a personal interest in the </li></ul><ul><li>business. </li></ul>PARTNERSHIP ADVANTAGES
  5. 5. <ul><li>Partnership may be dissolved by withdrawal of a partner, death of a partner or bankruptcy. </li></ul><ul><li>The authority for decision is divided. </li></ul><ul><li>No legal structure exists that can be passed on or sold </li></ul><ul><li>Lack of flexibility in transferring ownership </li></ul><ul><li>It could prove difficult to market the business </li></ul>PARTNERSHIP DISADVANTAGES
  6. 6. A private company is a separate legal entity distinct from its shareholders. A private company is liable for its debts and creditors and cannot sue the shareholders for the payment of these debts. . A private company can have up to 50 share holders. PRIVATE COMPANY
  7. 7. <ul><li>It is adaptable to both small and large business </li></ul><ul><li>The life of the business is perpetual </li></ul><ul><li>The shareholders have limited liability </li></ul><ul><li>Transfer of ownership is easy </li></ul><ul><li>Easy to raise capital and expand </li></ul><ul><li>Efficiency of management is maintained </li></ul>PRIVATE COMPANY ADVANTAGES
  8. 8. <ul><li>It’s more difficult and expensive to organize than other forms of ownership </li></ul><ul><li>It is subject to many legal requirements </li></ul><ul><li>Subject to special taxation rates, a company pays a constant rate of tax regardless of income </li></ul><ul><li>The law requires a greater disclosure of financial affairs </li></ul><ul><li>An annual audit must be performed </li></ul>PRIVATE COMPANY DISADVANTAGES
  9. 9. A sole trader is a business owned by one person, its also known as a sole proprietorship, the owner will be trading in your personal capacity and under his/her own name. The sole proprietor is the owner of all the business assets and is responsible or fully liable for all the business debts. SOLE PROPRIETOR
  10. 10. <ul><li>The business is simple to organize </li></ul><ul><li>The owner is free to make decisions </li></ul><ul><li>The business has few legal requirements. The owner receives all the profits </li></ul><ul><li>The business is easy to discontinue </li></ul><ul><li>No legal formalities are required to establish a sole proprietorship </li></ul><ul><li>The overhead costs and management expenses are lower than for other entities </li></ul><ul><li>The owner has the freedom to adjust the business as they see fit </li></ul>SOLE PROPRIETOR ADVANTAGES
  11. 11. <ul><li>The owner's personal assets are at stake, if the business fails </li></ul><ul><li>The business usually remains small due to the limited resources </li></ul><ul><li>It's normally difficult for owners to raise finance for their businesses </li></ul><ul><li>The business closes when the owner dies or retires </li></ul><ul><li>Unlimited liability for the owner- the owner is legally liable for all debts of the business, so any personal and real property may be attached by creditors </li></ul><ul><li>Limited ability to raise capital-which in turn limits the expansion of a business when new capital is needed. </li></ul><ul><li>Limited skills- although the owner can hire employees with other skills. </li></ul>SOLE PROPRIETOR DISADVANTAGES
  12. 12. Close corporations (CCs) have been designed especially for small businesses. It is a legal entity more separated from its owners than a partnership or sole proprietorship, and more flexible than a company. A CC is regarded as a separate and distinct legal person and is formed and owned by its members but exists independently from them. A CC may be formed with one or more members but may not have more than 10.
  13. 13. <ul><li>A CC is a separate legal entity </li></ul><ul><li>It may have a maximum of 10 members </li></ul><ul><li>Annual financial statements are simple </li></ul><ul><li>Members' interests may vary </li></ul><ul><li>As a legal person, a CC can sue and be sued; </li></ul><ul><li>It is simple and inexpensive to change the particulars of the founding statement; </li></ul><ul><li>The members make decisions. No special resolutions need to be made </li></ul><ul><li>CCs are particularly suited to family businesses. </li></ul>CLOSE CORPORATION (CC) ADVANTAGES ·
  14. 14. <ul><li>Every member is an agent of the CC and a member can be liable to the CC for not managing the business properly; </li></ul><ul><li>In order to dispose of a member's interest in the CC, the written consent of all members must be obtained; </li></ul><ul><li>A CC cannot be sold to a company; </li></ul><ul><li>A CC cannot be subsidiary of a company or another close corporation; </li></ul><ul><li>Banks may require you to have your CC's books audited; </li></ul><ul><li>CCs pay a fixed rate of tax on every rand of profit earned; and </li></ul>CLOSE CORPORATION (CC) DISADVANTAGES
  15. 15. <ul><li>Waseem Pochee - 20905799 </li></ul><ul><li>Muhammed Moola - 20924249 </li></ul><ul><li>Muhammed Khalid Gulam - 20925549 </li></ul><ul><li>Shikhar Soni - 20909271 </li></ul><ul><li>Bharushen Ramlagan - 20814765 </li></ul><ul><li>Duvaksha Ramnarian - 20800675 </li></ul>