All business organizations in Singapore with the intent of profit generation are categorized under two main types of corporations, either unincorporated or incorporated. The law treats each entity differently. Unincorporated Entities
Unlike the incorporated entities, an unincorporated entity business does not have separate legal personality. The law does not separate the people who establish the business and the business itself. In other words, the rights and liabilities of the unincorporated entity are treated as thou the rights and liabilities of the owner. In Singapore, the three most common types of unincorporated entities are: sole proprietorship, partnership and joint venture. Incorporated Entities
Through incorporation, a business entity will becomes a separate legal body. Being a legal body, it has its own share of legal rights and obligations, the rights and obligation of a company is not equivalent of that to its members. This is to say, if the founder of a company retired or leave the corporation, it will still continue to exist. Traditionally, the law only recognizes nature persons in the position of enjoying rights and owing obligations. However by the process of incorporation, the law recognizes an artificial entity to be capable of having legal rights and obligations. Difference in Legal Entities: Unincorporated and Incorporated Entities Unincorporated Entities
A sole proprietorship is basically a business entity owned by a single person. In accordance to s 5(1) BRA, a sole proprietor only need to register the business name with Registrar of Business (BRA), which is part of Accounting and Corporate Regulatory Authority); in return receive a certificate of registration of a business. Sole proprietorship is an unincorporated business entity with unlimited liability and full business responsibilities, rights and obligations borne to the sole proprietor. Hence, if a sole proprietor business fails, it would equate that the registered owner of the sole proprietorship would have to bear unlimited responsibility, liabilities generated by the business. If a sole proprietorship cease operation with debts to creditors, the latter can pursue the sole proprietor personally for repayment, even to the extend making the sole proprietor a bankrupt. Therefore, the main disadvantage of a sole proprietor is that the owner is fully responsible and has unlimited liabilities for all the debts of his business entity. Partnership
A partnership is a business entity comprises of two or more persons, up to 20 persons with the exception of accountancy and law; of operating a business with the common intent of creating profit. The main principles of partnership law are found in the Partnership Act (PA). In accordance to s 46 PA, other partnership law which can be found within the rules of common law and equity continues to apply in Singapore. In a partnership, it primarily must prove the existence of commercial elements. Each partner is personally liable for its dealings without limitations, including its debts. In accordance to s 24(1) PA, every partner is entitled to share equally the firm’s profits and is liable equally for the firm’s loss. However, under s 21 PA, it stated that the rules therein are “subjected to any agreement express or implied between partners”. Therefore, partners can have their own internal agreement on bearing the difference in liabilities according to the amount of capital each initially contribute. A partnership can dissolved or insolvent anytime. If it insolvent, any profit will be split amongst the partners. Assets of the partnership will be utilized to pay off any debts. All partners will have unlimited liabilities for any debts of the firm and creditors can claim against the partners till the extent of bankruptcy. Joint Ventures
Joint venture (JV) is an association of persons, either natural or corporate, and agreed by contract to engage in similar undertaking...
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