Business Organisation and Ownership
This domain compares the main forms of business ownership and the factors that determine which form suits a situation. Candidates must know the sole trader (one owner, unlimited liability, easy to start, limited capital), the partnership (two to twenty partners in most jurisdictions, shared capital and skills, unlimited liability unless a limited partner, governed by a partnership agreement), the private limited company (separate legal personality, limited liability, shares not offered to the public) and the public limited company (shares sold to the public, often listed on a stock exchange, subject to stricter disclosure). Also understand co-operatives (owned and controlled by members, profit shared as dividend), public corporations (state-owned, providing essential services) and franchises (a licence to trade under an established brand).
Key concepts: legal personality (the business can sue and be sued in its own name), limited versus unlimited liability, continuity of existence, capital-raising capacity, control and privacy, and the documents needed to form a company (memorandum and articles of association).
Traps: students often say a private limited company 'cannot sell shares' - it can, but not to the general public. 'Limited liability' does not mean the company cannot owe money; it means owners risk only their invested capital. A public corporation is not the same as a public limited company. Partnerships do not always have unlimited liability - limited partners exist.
Rule of thumb. Match the form to the need: small capital, quick start, personal control → sole trader; more capital and shared skills → partnership; large capital and protection of personal assets → company; member benefit rather than outside profit → co-operative.