1.4 Distinction between companies and other forms of business associations sole proprietorships, partnerships and cooperative societies

1.4 DISTINCTION BETWEEN COMPANIES AND OTHER FORMS OF BUSINESS ASSOCIATIONS SOLE PROPRIETORSHIPS, PARTNERSHIPS AND COOPERATIVE SOCIETIES.

      1. Companies:

1. Legal status: Companies are separate legal entities from their owners or shareholders.
2. Limited liability: Shareholders of companies generally have limited liability.
3. Ownership: Companies are owned by shareholders who hold shares representing their ownership interest.
4. Management: Companies have a board of directors that oversees the company’s operations and major decisions.
5. Perpetual succession: meaning they continue to exist even if shareholders change or new shareholders join.

2. Sole Proprietorship
3.  1.Legal status: The business and the owner are considered the same legal entity.
4.  2.Unlimited liability: The owner of a sole proprietorship has unlimited liability. They are personally responsible for all the debts and obligations of the business.
5.  3.Ownership: The business is owned and operated by a single individual.
6. 4.Management: The owner has complete control and management of the business.

3. Partnerships
4. 1. Legal status: Partnerships are generally not separate legal entities, except for limited liability partnerships (LLPs) in some jurisdictions.
5. 2. Shared liability: Partners in a partnership have unlimited liability, meaning they are personally responsible for the partnership’s debts and obligations.
6. 3. Ownership: Partnerships are owned by two or more individuals who agree to share profits and losses.
7. 4. Management: Partners typically participate in the management and decision-making of the business.

4. Cooperative societies
5. 1. Legal status: Cooperative societies are separate legal entities formed by a group of individuals with a common goal or interest.
6. 2. Cooperative principles: Cooperative societies operate based on principles of democratic control, voluntary membership, and equitable distribution of benefits among members.
7. 3. Ownership and control: Members of the cooperative society have equal ownership and control, with each member having one vote regardless of their level of investment or shareholding.
8. 4. Profit sharing: Profits are distributed among members based on their participation or patronage of the cooperative.