Types of Private Ownership

1
Types of Private Ownership
2
Types of Private Ownership
An Overview
Target audience - S.4 Economics Students
Uses of the program - lecturing assistance
Approximate length - ONE lesson
Supplements - textbook, notes
3
Introduction Threre are THREE common forms of
private enterprises. They are
Sole Proprietorship
Partnership
Limited Company
4
Sole Proprietorship
Meaning
Features
Advantages
Disadvantages
5
Sole Proprietorship
Meaning
It is a firm with only ONE owner
6
Sole Proprietorship
Features
1. No separate legal status
2. Unlimited liability
3. Lack of continuity
4. Freedom of transfer of business
5. Simple to set up
7
Sole Proprietorship
Advantages
1. Strong incentive
2. Prompt decision making
3. Close relationship with employees
4. Close contact with customers
5. Simple to set up
6. Lower profit tax rate in H.K.
8
Sole Proprietorship
Disadvantages
1. Unlimited liabilities
2. Limited capital for expansion
3. Excessive responsibility
4. Lack of continuity
9
Partnership
Meaning
Types
Features
Advantages
Disadvantages
10
Partnership
Meaning
A relationship between persons carrying on a
business for profit.
11
Partnership
Types
1. General Partnership
2. Limited Partnership
Their main differences are some partners in
limited partnership are limited partners. They
enjoy limited liabilities.
12
Partnership
Features
1. Limit of 2 -20 partners
2. No separate legal identity
3. Unlimited liabilities
4. Act by one binds all others
5. Regulations on admission/withdrawal of partners
6. Lack of continuity
13
Partnership
Advantages
1. Wider sources of capital
2. Wider scope of specialization
3. Cost and risk sharing
4. Simple to set up
5. Lower profit tax rate in H.K.
14
Partnership
Disadvantages
1. One partners errs, all partners suffer
2. Possible delay in making decision
3. Inflexible organization
4. Lack of continuity
15
Limited Company
Types
Features
Advantages
Disadvantages
16
Limited Company
Types
1. Private limited company
2. Public limited company
Lets see their difference !
17
Private Vs Public Limited Company
Private
Public
No. of shareholder
2 -20
2 - ?
Transfer of shares
Not freely
Freely
Public trading of shares
Not allowed
Allowed
Disclosure of accounts
Not to public
To public
18
Limited Company
Features
1. Owners are shareholders
2. Independent legal identity
3. Limited liability
4. Lasting continuity
5. Possible separation of ownership management
19
Limited Company
Advantages
1. Limited liability
2. Widest source of capital
3. Lasting continuity
4. Higher efficiency in management
5. Shares easily transferable
20
Limited Company
Disadvantages
1. Longer time in making decision
2. More costly to maintain morale
3. Lower incentive
4. More complicated to set up
5. Higher profit tax rate in H.K.
21
THE END