Skip to content

CS Executive · Setting Up of Business, Industrial and Labour Laws · Selection of Business Organization

Three friends in Surat start a trading firm and want the least statutory compliance and maximum control, accepting that the business will not have perpetual succession. Which factor are they prioritising over continuity?

They are prioritising ease of formation and flexibility of operation. A simple partnership has minimal compliance and gives partners direct control, but it lacks separate legal personality, limited liability and perpetual succession. Those advantages belong to companies and LLPs, which they are consciously not choosing.

  1. AEase of formation and flexibility of operationCorrect
  2. BLimited liability of members
  3. CAbility to attract venture capital
  4. DSeparate legal personality

Explanation

A general partnership is easy to form and flexible but is not a separate legal entity and does not enjoy limited liability. Their stated priorities are minimal compliance and control. Limited liability, venture capital and separate personality are features of corporate forms.

Did you get it right without looking?

One question tells you little. A timed set on Selection of Business Organization shows your real accuracy, how long you take and where you lose marks.

Practise Selection of Business OrganizationFree diagnostic mock

More Selection of Business Organization questions