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Corporation and Business Law

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Added on  2023-04-08

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This document provides an overview of different business structures and their legal implications in Corporation and Business Law. It discusses the liabilities and responsibilities of sole traders, partnerships, and proprietary companies. The document also highlights the financial resources, profits sharing, and compliance requirements for each business structure.

Corporation and Business Law

   Added on 2023-04-08

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Running head: CORPORATION AND BUSINESS LAW
Corporation and Business Law
Name of the Student
Name of the University
Author Note
Corporation and Business Law_1
1CORPORATION AND BUSINESS LAW
Part A
According to Fair work Act, 2009 a sole trader implies a structure were the owner of the
business and the business is treated as a single personality and all the debts and the liabilities
of the business are his personal responsibility. Both the set up cost and the administration
costs are nominal in case of sole traders. This form of business cannot be construed to be a
separate legal identity form its owner. The business in case of sole trader is the same legal
entity as the business owner. However, the setting up of such businesses still requires the
compliance with registration, permit and license laws that are applicable. The regulations
connected with this structure is generally simple and the working is not hectic. It requires a
nominal working capital1. This is applicable because sole trader has to deal with employees.
Partnerships is a business structure, which involves two or more people who creates a
business. It does not require an incorporation. The financial resources of the partners are
merged together to form a single business. The profits of the business will be shared between
the partners in accordance with the agreement between them. The setting up of partnership
businesses are somewhat hassle free and required a minimal amount of expenditure. Being
the establishment cost distributed among the partners, the burden of the expenditure does not
falls upon the owners. In this kind of business structure, the each of the partners are jointly
responsible for the liabilities and the debts of the partnership2.
In case of proprietary company, the company is legal entity itself and is not having the
same entity as that of its shareholders. In case of these companies, the liability pertaining to
the shareholders are unlimited. This is because the company has a separate entity identity
different from its shareholders. The transfer of these kind of business structures is simple as it
can be effected by the sale of share. However, this kind of business structure requires a huge
1 Burns, Paul. Entrepreneurship and small business. Palgrave Macmillan Limited, 2016.
2 Schell, James M. Private equity funds: Business structure and operations. Law Journal Press, 2018.
Corporation and Business Law_2
2CORPORATION AND BUSINESS LAW
volume and capital and the formation of the same is complicated, as it requires a considerable
amount of legal compliances. The reporting requirement of these companies are also highly
intricate and the profits of these companies are distributed among the shareholders by way of
dividends3.
Part B
According to Partnership Act, 1961 in case of partnerships, two or more people who
creates a business are jointly responsible for the liabilities and the debts of the partnership. It
does not require an incorporation. The financial resources of the partners are merged together
to form a single business. This creates a liability of each and every partners jointly and
personally for the transactions that are entered upon by the partnership firm as a single entity.
The partners are jointly and severally liable to the third parties. The third parties has the
option of suing the partners for the inconvenience committed by each of the partners The
profits of the business will be shared between the partners in accordance with the agreement
between them. The setting up of partnership businesses are somewhat hassle free and
required a minimal amount of expenditure. Being the establishment cost distributed among
the partners, the burden of the expenditure does not falls upon a single partner. In case of the
losses and the liabilities that has been caused to the partnership firm the partners will be
personally liable for the losses that has been caused by the partnership. The partners are
generally the agents of the partnership business and each of the partners are treated as an
agent for each other as well. In case of insolvency the liability of the partners are unlimited
and the estates the partners that are personally held by the partners are affected. The third
parties has the right to sue the partnership for the acts of any of the partners and all the
partners will jointly and severally held liable for the acts of each of the partners4.
3 Young, Courtney, and Sumantra Ghoshal. Organization theory and the multinational corporation. Springer,
2016.
4 Pak, Alexey, Lila L. Carden, and Jamison V. Kovach. "Integration of project management, human resource
development, and business teams: a partnership, planning model for organizational training and development
Corporation and Business Law_3

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