Chapter 2 Forms of Business Ownership

Sole proprietorship
1. Characteristics of a sole proprietorship
(a) Owned by one person
The owner alone puts _________ into the business and has complete
responsibility for _________ the business. Any profit or loss that results is the
_____________.
(b) Unlimited liability
- A sole proprietorship is ______ a legal entity. This means the firms has no
separate _________________ from its owner. (A legal entity is an entity
which can own ___________, engage in _________ and make ________ in its
own name)
- If the business fails, the owner bears _________________________. This
means he is responsible for settling all the _______. He may even have to sell

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his ________________________.
(c) Small scale of business
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Since it is __________ for a sole proprietor to raise capital, the scale of a sole
proprietor’s business is usually _________.
(d) Managed by the owner
Besides supervising the workers, the owner has to perform various tasks such as
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_____________________________ and __________. The owner makes all the

_________ in the business and works _______ hours.
2. Advantages of sole proprietorship
V.

(a) _______ set-up procedures: it is _______ to set up a sole proprietorship. The

owner can start the business after obtaining a __________________________.
(b) _______ set-up costs: ________ money is needed to set up the business.
__________ and __________ operations: since the owner can make decisions
_________ according to changes in market demand.
(c) Close relationship with ________: the owner is able to give customers
________ attention since the scale of a sole proprietorship is usually _______.
(d) Close relationship with _________: since there are usually _______ employees.
In a good working environment, work is done more ___________.
(e) _________ profits tax rate: the profits tax rate was only ____% , compared with
_______% for a limited company.
(f) _______ transfer of ownership

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3. Disadvantages of sole proprietorship
(a) __________ liability: if the business fails, he is _________ liable for the debts
of the businesses without _________.
(b) Little _______ to rest: a sole proprietor has _________ responsibility and
_______ workload.
(c) Lack of _________: a single owner may not have all the skills such as
_______________________________________ to develop the business well.
(d) Lack of _________: the existence of the business always depends on the
owner’s _________________. Illness or death means that the business may
________________ if there is no one to carry it on.
(e) Lack of ___________________: many owners have to depend on ________ and
__________________, or ask for loans from ___________ or _________.
Banks and __________________ may not be willing to lend money to small
firms.
(f) __________ to compete with large businesses: due to limited ________ and

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___________, it may be difficult for sole proprietor to compete with large
businesses.
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(g) _________ burden of some unavoidable costs: all businesses have to bear
certain costs, satisfying the ____________ Ordinance by improving fire escapes
or installing ____________________.
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Partnership
1. Types of partners
(a) Limited partner: a limited partner has ________ liability, his liability is limited
V.

to his ____________ in the business. He invests ________ in the business. He

does not take part in ___________ the business.
(b) General partner: a general partner has ___________ liability. He invests
_______ in the business. He is involved in the ___________ and __________
of the business.
(c) Nominal partner: a nominal partner is not an _______ of the firm. He does not
________ in the business. He is invited to join the partnership because he has a
____________ or __________ that the business requires. He usually works as a
___________ at the firm but does not take part in ________ the business. He
does not share in the ________ but may be paid a ______ by the partnership.
He is held liable to _______________ for the acts of the partnership.

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2. Types of partnerships
(a) General partnership: all the partners are _________ partners and have
_________ liability.
(b) Limited partnership: this includes one or more ________ partners. However,
there must be at least one _________ partner with _________ liability. If a
general partner withdraws, dies or goes bankrupt, the partnership would _____.
3. Characteristics of a partnership
(a) Number of partners: there must be at least _______ partners.
(b) Unlimited liability: a partnership is not a _________________. It the business
fails, the _________ partners will be personally liable for all the debts.
(c) Small scale of business: since the sources of _________ to partnership are quite
limited, the scale of the business is usually _________.
(d) Bound by the decisions made by others: all partners are ________ bound by the
decisions made in the name of the firm and are responsible for the __________
of those decisions.
4. Advantages of partnership

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(a) ________ to set up: partners can start the business after signing a _________
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agreement and obtaining a _______________________________.
(b) _______ sources of capital: when compared with a sole proprietorship, _____
capital is available as there are _______ owners in a partnership.
(c) Division of labor: each partner can contribute specialized _________and
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_______ to the business.

(d) _______ to attract employees: given its small scale, employees may have a
better chance of ___________. Sometimes, capable employees may become
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___________.
(e) _______ profits tax rate
(f) Sharing business ________: the business risk is borne by __________ partners.
5. Disadvantages of partnership
(a) __________ liability: all ________ partners have unlimited liability.
(b) No separate legal existence: its future may be threatened by their ________ or
________. A partnership would ________ if a general partner withdraws, dies
or goes bankrupt.
(c) _______ operational efficiency: since decisions made by partnership should be
agreed by all of the partners, there may be less ________ and _________ in
decision-making.
(d) Bound by the decisions of others: a ________ decision made by one general
partner will affect the whole business.

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Limited company
1. A limited company is a business with a ___________ legal existence and usually
owned by many ______________.
2. The ownership of a limited company can be divided into ________ also called
_________, so a limited company is also called ________________ company.
3. Investors are called _______________ also called _____________ and their
___________ is limited to the amounts of money they have invested. Shareholders
do not necessarily run the business. They may appoint ________ for this purpose.

Types of limited companies

1. Private limited company
(a) A private limited company is called private because its shares cannot be sold to
the ________. It must have between ______ to ________ shareholders.
(b) A private limited company does not need to disclose its _________________
to the public.

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(c) If shareholders wish to sell their shares, they may be required to first offer
them to the __________ shareholders of the company.
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(d) Many private limited companies in HK are _________ businesses. They set up
to obtain capital without losing _________ of the business.
(e) The board of directors have the power to ________ to register share transfers.
Shares _______ be sold on the stock market.
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2. Public limited company

(a) A public limited company can sell its shares to the ________. The no. of
shareholders has no ________ limit, but there must be at least ______
V.

shareholders.
(b) A public limited company needs to ________ its financial information to the
general public every year.
(c) In HK, a public limited company can become a _______ company by applying
to HK _____________________________ (HKEx) for listing.
(d) Shares can be _________ transferred. Shares can be bought and sold freely on
the ___________________ if they are listed on a stock market.
3. Characteristics of a limited company
(a) Separate legal existence: by law, a limited company is an entity with a
________ legal existence and is therefore _____________ of its owners.
(b) More sources of capital: a listed company can raise capital by issuing _______
to the general public.
(c) Restriction on the company’s name: a limited company must have the word
_________ or ‘Ltd’ as the last word in its name.

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 (d) Limited liability: ______________ have limited liability. Their liability is
limited to the amount they have __________.
(e) Separation of ownership and management: shareholders may not have the
_______ and _______ to manage the company and so may elect a board of
_________ to run the business.
(f) Large scale of business: a limited company may have a huge no. of ________
and _________. Since they have more sources of ________,limited companies
are usually large in scale.

Types of shares
1. Ordinary shares also called ___________________
(a) A company may pay __________ to its shareholders. In general, ordinary
shareholders earn ________ dividends when the company earns more profits.
(b) Sometimes dividends are not distributed even though the company is earning
profits because the company wants to use the profits for further ____________.

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(c) Ordinary shareholders have ________ rights at the annual general meeting and
can elect a board of _________ to run the company.
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2. Preference shares also called _____________________.
(a) Preference shareholders receive dividends ________ ordinary shareholders are
paid and have _______ dividends.
(b) Preference shareholders have no ________ rights.
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Advantages and disadvantages of a limited company

1. Advantages
V.

(a) Shareholders have ________ liability, and can thus avoid the loss of their
________ assets.
(b) It is a __________ legal entity. Changes in shareholders and directors will not
affect the running of the company, so is has ___________.
(c) It is _______ for a limited company to raise capital than a sole proprietorship or
partnership, resulting in a better chance of ______________.
(d) The size of the business is ________ than a sole proprietorship or partnership
and so it is able to operate on a ________ scale.
2. Disadvantages
(a) Setting up a limited company is __________ because more documents are
required for registration.
(b) The profits tax it pays is ________ than sole proprietorship or partnership.
(c) The structure of the company may be so _______ and ________ that the process
of decision-making takes time. This results in a lack of _____________.

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Comparison between private and public limited companies
1. Private limited company
(a) Advantages
- no need to ________ a lot of information
- share are not bought and sold freely, so the existing shareholders have better
_________ of the company
- ________ accounting costs preparing financial statements are incurred
- the legal and administrative procedures for forming a private limited company
are less ________ and ____________.
(b) Disadvantages
- it is more _________ to raise capital as the creditworthiness of a private
limited company is _______ than that of a public limited company
- shares _________ be easily transferred as the board of ________ has the
power to refuse to register share transfers.
2. Public limited company
(a) Advantages

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- it is ________ to obtain loans from banks and make purchases on _______
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because of its higher ________________.
- if the company becomes a listed company, more capital can be raised by
issuing ________ on the stock market.
- the separation of ownership and management enables the company to hire
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__________ to assume different roles. This improves the company’s

___________ and ___________.
(b) Disadvantages
V.

- the company needs to ________ much more information, including its

financial information
- if most of the shares fall into the hands of other parties, the existing
shareholders may lose ________ of the company
- if it is a listed company, the ________ of its shares will be affected by many
other factors on the stock market.

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Joint venture
Joint venture is formed when two or more entities usually ________ join together to
_________ or __________, or sell __________.
1. Reason for forming a joint venture
(a) Firms that form a joint venture usually have different types of ________,
__________, __________ and __________. By pooling their resources,
together, they can do something better than they do separately.
(b) Many joint ventures are formed by companies from different companies. These
are called ____________ joint venture. Companies planning to enter
__________ overseas markets will often form joint ventures with local
companies because the local companies can:
- provide valuable ___________ to foreign companies
- help foreign companies establish a working relationship with other local
companies, such as _________ and __________.
- help foreign companies meet the __________ for doing business in those
overseas markets

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(c) Characteristics of a joint venture
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- a joint venture is formed by two or more entities usually _______
- partners in a joint venture usually contribute different types of ____________
_________________________
- the entity formed by a joint venture has a _________ legal status from the
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partners in the joint venture

- partners in a joint venture are usually involved in __________ the business
- a joint venture can be ___________ with the consent of all parties involved
V.

(d) Advantages
- Sharing _______: the risk of launching new products can be shared between
partners
- Economies of ______: when two or more companies work together, they can
rapidly _________ their production capacity and ________ their production
costs
- Shared _________: each firm’s different _________ and ________ can be
used to produce and sell new products which neither firm could do alone
- More ________: firms can pool their _________ resources together and more
capital can be obtained
- Easier entry into ______ markets: this problem can be solved by finding a
______ firm which understands the local market as a partner

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 (e) Disadvantages
- _____________ among partners: the partners in a joint venture may have
________ about how to manage the business. This can affect the _________
and __________ of the joint venture
- _________ of information: as the partners in a joint venture have to
____________ with each other frequently, it may be difficult for them to
prevent their firm and product ___________ from being leaked to other
partners
- Loss of ____________: neither firm in the joint venture can make decisions
on its own. Matters related to the business must be __________ with other
partners and their _________ must be sought.

Franchise
1. Franchise is a business arrangement in which the __________ allows the
_________ to sell its goods or services, in return for a __________________.

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Franchising is a way for franchisees to operate as ___________.
2. Franchisees are often required to pay __________ to the franchisor, and share
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___________ and ____________ fees with the franchisor regularly.
3. Some franchisors calculate royalties based on ______________ or ___________
that the franchisees earn. Franchisees must operate their businesses in a
_________ way to that of the franchisor. The franchisor will provide management
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__________ to franchisees before they start their businesses.

Characteristics of a franchise
V.

1. ________________ well regarded by customers: most franchises have built up a

good ___________ for their products or services. They are recognized by
customers as having good, consistent __________.
2. Support from the ___________: franchisor helps the franchisees set up the
_________ system and provides ________ for inventory purchase. The franchisor
also provides _________ to franchisees and their ___________.
3. ____________ operation: the stock’s look, staff uniforms, logos, products and
prices are standardized according to the ____________’s requirements.
4. Control by ____________: the ________ of the stores, such as product _______
and ________ strategy, are monitored regularly by the franchisor.
5. Sharing of ____________ expenses: the ___________ share the cost of
promotional campaigns which are carried out by the __________.
6. Chain stores in different ___________: the _________ system operates as a chain
with stores located in different areas.

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Advantages and disadvantages to Franchisees
1. Advantages
- Franchisees obtain support from the franchisor in terms of ___________________
_____________________________________________________________.
- Franchised stores have built up __________. Their products are ___________ and
___________ by customers.
- It is _______ to set up business as the franchisor provides a wide range of support
to franchisees.
- Franchisees enjoy the benefits of a large shop, such as ________ costs, when
buying stock in ________.
- The ___________ system of franchised stores helps establish goodwill quickly.
2. Disadvantages
- Franchisees are often required to pay __________, ____________ and
___________ fees to the franchisor whether or not a profit is earned.
- Franchisees may ________ too heavily on the support of the franchisor.

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- Some franchisors’ head office are located ___________, so franchisees may find
it difficult to ______________ and receive _________ within a short time.
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- Franchisees may have _________ independence in operating their businesses as
the franchisor exerts much ________ over a franchisee’s operations.

Advantages and disadvantages to franchisors

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1. Advantages
- Franchisors can obtain _________ from franchisees who have to pay a franchise
fee to join the franchise.
V.

- Operating costs of franchisors can be _________ as their promotional and

management fees are shared by franchisees.
- Franchising provides the business with an opportunity to ________ and build the
__________ with capital and manpower provided by franchisees.
- The ________ of the business is shared by franchisees who have also invested
money in the business.
2. Disadvantages
- Franchisors need to make a ________ investment to build the franchise system
and infrastructure, and to provide _________ and _________ to franchisees.
- Franchisees may _______ the reputation of the business if they manage their
outlets poorly.
- Franchisors may need to disclose ______________ information to franchisees
who may become their future ______________.

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Public enterprise: are wholly owned by the _____________.
1. Types of public enterprise
(a) Government department
e.g. _______________________ is responsible for preventing and detecting
crime; ___________________________________ is responsible for food
safety and public hygiene; the _______________________________ promotes
activities related to trade and industry.
(b) Public corporation
- A public corporation is a firm ________________________________. It is
wholly owned by the government but is ___________ independent of the
government except for the ________ capital investment.
- Unlike government departments, public corporations have a _________ legal
existence. The government does not participate in the daily running of the
businesses but exercises ___________ over them. It appoints a board of
_________ to manage these public corporations.

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- Although all of these corporations are wholly owned by the government, they
are ______-financing and operate on a ____________ basis.
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2. Advantages of a public enterprise
(a) ________ to raise capital: private enterprises have __________ in
government-supported public enterprises and are willing to _________ their
construction projects.
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(b) Narrows the _________ gap: HK Housing Authority provides affordable public
housing for _____________ families who cannot afford private housing.
(c) Provides __________ to the general public: _______________ Department
V.

provides water to the people of HK; the _____________ Department provides

fire prevention and fighting services to the public.
(d) Avoid ___________ resources: the government is able to ensure that there is no
___________ an wasting of resources.
3. Disadvantages of a public enterprise
(a) For all public enterprises
- There is a danger that public enterprises will become ____________ as most
do not face direct competition.
- As public enterprises are large, decision-making processes are __________
and _______, thus reducing the efficiency of ______________.
(b) For government departments only
- Increase the burden of _____________ as losses by public enterprises usually
have to be borne by __________.

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Multinational corporation (MNCs)
1. MNCs are enterprises which operate in many _________. They are _______ scale
and most are _________________ companies.
2. MNCs make the following important contributions to countries where they operate:
- They bring in ________________________________________.
- They provide ____________ to local workers and management __________ to
local managers.
3. Characteristics of MNCs in HK
(a) Size: they are large companies in terms of ________ and __________.
(b) Management: MNCs employ ___________ managers to run their business.
(c) Operations: they are mostly _____________-based companies.
(d) Organisational structure: MNCs have _________ orgnaisational structures.
_____________ in MNCs needs to pass through different layers and
departments. Decision-making is thus usually _________.

DSE Questions Section A:

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1. Which of the following statements is correct?
A All partners in a limited partnership enjoy limited liability.
B All shareholders of a limited company have voting rights in the board of
directors’ meeting.
C

C A limited company needs to disclose its financial statements to the public.

D A public corporation is owned by the government.
2. Which of the following are differences between a small firm and a large enterprise?
V.

Small firm Large enterprise

(1) Decision making flexible inflexible
(2) Scope of business diversified specialized
(3) Managerial hierarchy fewer levels more levels
A (1) and (2) only
B (1) and (3) only
C (2) and (3) only
D (1), (2) and (3)
3. If you set up a business with your friend as a partnership, which of the following
benefits would you enjoy?
(1) You may bear limited liability
(2) The company would exist as a separate legal entity
(3) Management expertise offered by a board of directors
(4) Company information needs not be disclosed to the public

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 A (1) and (2) only
B (1) and (4) only
C (2) and (3) only
D (3) and (4) only
4. Which of the following descriptions of business ownership is correct?
A A limited company distributes dividends to ordinary shareholders before
preference shareholders.
B A franchise is formed by two or more business entities to develop, produce
or sell products.
C A sole proprietorship does not have a separate legal entity status.
D Public enterprises are wholly owned by large multinational corporations to
provide essential goods and services to the public.
5. Which of the following are the roles of small and medium enterprises in Hong
Kong’s economy?
(1) create employment

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(2) widen the variety of products offered
(3) promote competition
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A (1) and (2) only
B (1) and (3) only
C (2) and (3) only
D (1), (2) and (3)
C

Section B:
1. Mary is an experienced designer who has a wide customer network. She is
V.

considering setting up a small interior design firm on her own. At the same time,
another designer, Paul, invites her to form a partnership.
(a) Give two reasons why Mary should accept Paul’s invitation instead of setting up
a firm on her own. (4 marks)
(b) Mary finally sets up the interior design firm on her own. List two criteria for
setting good business goals for her. Explain each with an example.
(4 marks)
2. In deciding whether to join a fashion retail chain or not, suggest three criteria for
assessing the franchisor. (6 marks)

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DSE 2013
1. Which of the following descriptions about a franchised shop is correct?
A. Operates under the authorization of franchisor
B. Has full control over its promotion strategies
C. Must be registered as a limited company
D. Only applicable to retail and catering businessess
2. All the owners of a business enjoy limited liability. Although the business has no
regulatory obligation to disclose its financial reports, it still publishes these reports
via the internet each year. The business is a
A. Limited partnership
B. Private limited company
C. Company listed on the Main Board
D. Company listed on the Growth Enterprise Market Board

DSE 2014

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1. Which of the following statements about limited companies in Hong Kong is/are
correct?
ha
(1) A limited company is a separate legal entity.
(2) Limited companies enjoy a lower profits tax rate than sole proprietorships.
(3) Limited companies are required to publish their financial statements in a
newspaper.
C

A. (1)
B. (2)
C. (1) and (3)
V.

D. (1,), (2) and (3)

2. Patrick, Queenie and Ronald jointly set up a business in the form of a limited
partnership. The partnership agreement contains the following terms:
- Only Queenie and Ronald will contribute capital.
- Patrick and Ronald have no involvement in the daily operations of the partnership.
- If the partnership is liquidated, only Queenie has to pay the outstanding debts of
the partnership, using her personal funds.
(a) Identify the nominal partner in this partnership. (1 mark)
(b) Suggest two contributions that a nominal partner could make to a partnership.
(4 marks)

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DSE 2015
1. A limited partner _______________________________.
A. is a nominal partner
B. is not liable for the debts of a partnership
C. does not need to invest money into a partnership
D. does not take part in the management of a partnership
2. Which of the following is/are the characteristic(s) of a public corporation?
(1) Its losses are borne by taxpayers.
(2) It is operated on a commercial basis.
(3) The government is involved in its daily operations.
A. (1)
B. (2)
C. (1) and (3)
D. (2) and (3)
3. John commenced a trading firm on 1 January 2014 as the sole owner. To raise

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money for expansion, John wants to change the form of business ownership of the
firm. He plans to invite five people to invest in and join the business as owners.
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After expansion, all owners shall have limited liability for the firm. Their
ownership cannot be freely transferred.
(a) According to the above information, which form of business ownership will
John adopt for the expansion? (1 mark)
C

(b) Apart from the restriction in ownership transfer, suggest two other
disadvantages for the form of business ownership mentioned in (a), as
compared to a sole proprietorship. (4 marks)
V.

DSE 2016
1. Which of the following descriptions of joint ventures in HK is correct?
A. Partners of a joint venture usually share the profits of joint venture equally.
B. A joint venture must be formed by one local company and one foreign
company.
C. A joint venture is an entity independent from all its partners.
D. A joint venture enjoys a lower profits tax rate than a general partnership.
2. Which of the following statements about business ownership are correct?
(1) Public corporations are wholly owned by the Government.
(2) The minimum number of shareholders of a limited company is 2.
(3) A nominal partner is not the owner of the partnership.

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 A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3) only
3. A ________ is easier to set up and enjoys a relatively low tax rate in HK. All
owners are liable for the business decisions of one another in this entity.
A. Partnership
B. Sole proprietorship
C. Private limited company
D. Public limited company
4. Carlo operates as reputable restaurant chain in Italy with customers from all over
the world. He is planning to establish branches in HK. A business consultant
suggests him to operate the branches in the form of franchising.
(a) Give two reasons why Carlo should establish the branches in the form of
franchising instead of setting up his own restaurants in HK. (4 marks)

DSE 2017
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ha
1. Compared to a sole proprietorship, which of the following is/are the advantage(s)
of a limited company?
(1) The business will not be closed upon withdrawal or death of the owner(s)
(2) The setup cost is lower
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(3) The profits tax rate is lower

A. (1) only
B. (1) and (2) only
V.

C. (1) and (3) only

D. (2) and (3) only
2. From the point of view of a franchisor, which of the following is/are the
shortcoming(s) of running a business in the form of franchising?
(1) Franchisee may set up his own business to become a competitor.
(2) It is difficult to wholly control the operation style of franchisee(s).
(3) If a franchisee manages his business poorly, the reputation of the whole
franchise business will be affected.
A. (1) only
B. (1) and (2) only
C. (2) and (3) only
D. (1), (2) and (3) only

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4. Which of the following statements about a nominal partner is/are correct?
(1) He is liable for the debts of the partnership.
(2) He takes part in the operation of the partnership.
(3) His reputation helps promote the partnership’s business
A. (1) only
B. (2) only
C. (3) only
D. (2) and (3) only
5. (a) What is a joint venture? (1 mark)
(b) Outline two advantages of running a business in the form of a joint venture.
(4 marks)
DSE 2018
1. Which of the following statements about the Ocean Park Corporation, a public
corporation in HK are correct?
(1) It is listed on the HK Stock Exchange.

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(2) Its board of directors is appointed by the government.
(3) It is self-sufficient financially.
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A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)
C

2. Which of the following statements about a partnership is/are correct?

(1) There is no limited partner in a general partnership.
(2) Limited partnership is a legal entity separate from its owners.
V.

(3) All partners in a limited partnership only have limited liability.

A. (1) only
B. (1) and (2) only
C. (2) and (3) only
D. (1), (2) and (3)
3. Compared to public limited company, which of the following is/are the
advantage(s) of a private limited company?
(1) Is subject to less government supervision
(2) Does not need to distribute dividends to shareholders
(3) Obtains financing more easily
A. (1) only
B. (2) only
C. (3) only
D. (1) and (2) only

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DSE 2019
1. Which of the following is/are difference(s) between a sole proprietorship and a
general partnership?
Sole proprietorship General partnership
(1) decision-making process shorter longer
(2) profits tax rate lower higher
(3) liability borne unlimited limited
A. (1) only
B. (1) and (2) only
C. (2) and (3) only
D. (1), (2) and (3)
2. Which of the following statements about joint ventures is/are correct?
(1) The business risk is shared by the joint venture partners.
(2) The joint venture will normally be dissolved when the joint project is
completed.

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(3) A joint venture is a new business entity formed by at least two businesses.
A. (1) only
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B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)
3. Pizza Deli is a multinational corporation founded in Italy and has branches in
C

London and Sydney. It is considering expanding to Asia by setting up its own

branch in HK. A reputable restaurant chain in HK invited Pizza Deli to join them as
a franchisee.
V.

(a) Describe the main feature of Pizza Deli as a multinational corporation.(2 marks)
(b) Explain to Pizza Deli two disadvantages of joining the restaurant chain as a
franchisee instead of setting up its own branch. (4 marks)

DSE 2020
1. Ken and Tracy plan to establish and operate a restaurant together, in which the
withdrawal of either side would not lead to its closure. Which form of business
ownership should they adopt?
A. Partnership
B. Public corporation
C. Private limited company
D. Listed company

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2. The following are the differences in characteristics of two partners in a partnership:
Partner A Partner B
Bearing of liabilities not required required
Introduction of capital not required required
Involvement in daily operations not required not required
Partner A is a __________ partner, while Partner B is a ___________ partner.
(1) (2)
A. nominal limited
B. nominal general
C. general limited
D. limited nominal
3. Company A and Company B specialize in designing and building large shopping
malls in HK. They plan to set up a new business together to carry out a construction
project – building a shopping mall in Causeway Bay. The project will last for five
years and the new business will be dissolved upon the completion of the project.

and Company B.
n
(a) Identify the form of ownership of the new business to be set up by Company A
(1 mark)
ha
(b) Explain one advantage of operating in the form of business ownership in (a)
above. (2 marks)
(c) Explain one difference between a partnership and the form of business
ownership in (a) above. (2 marks)
C
V.

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