Forms of business ownership and the private/public sector
Domain 2: Forms of business ownership and the private/public sector
The exam tests your ability to compare ownership forms by liability, control, finance, continuity and legal status, and to distinguish private-sector from public-sector organisations in Namibia.
Core rules
- Sole trader: one owner, unlimited liability, full control, easy to start, limited finance.
- Partnership: usually 2–20 partners, shared capital and skills, unlimited liability, and a written partnership agreement is recommended.
- Close corporation (CC): a Namibian form for small businesses; limited liability, separate legal personality, members' interest expressed as a percentage. Check current registration rules before advising a client.
- Private company (Pty) Ltd: separate legal personality, limited liability, shares not offered to the public, restrictions on transfer.
- Public company (Ltd): can offer shares to the public, must comply with company law and disclose more.
- Public enterprise: owned by government to provide services or strategic goods; funded by taxes or user charges; objectives may include access and affordability rather than profit.
- Co-operative: owned and controlled by members, one member one vote, profits shared according to use.
Worked example
Two friends want to open a bakery. As a partnership, they can pool N$150,000, share baking and sales duties, and split profits equally. But each partner is personally liable for business debts. If they expect to buy expensive equipment and serve large supermarkets, a private company gives limited liability and separate legal personality, but it must register, file returns and keep formal records. The choice depends on risk, finance needs and willingness to disclose.
Traps
Do not say a private company's shares are traded on the stock exchange. Do not confuse limited liability with limited finance. Do not assume public enterprises never charge fees. Do not ignore legal personality when discussing continuity.