Activity 1

a. Define the term “Partnership” [2]

b. State three differences between limited and unlimited companies [3]
c. Identify two differences between a sole trader and a partnership. [4]
d. Give two reasons why a sole trader might find it hard to compete with larger firms in the
same industry. [4]

Activity 2

TM Textiles Pvt. Ltd has been manufacturing towels and bed linen for ten years now. It is
currently owned by a very close group of ten friends and family members and communication is
very fast. The company has been very successful and has established itself as a trusted local
brand. It wants to expand its operations further and wants to sell its products to the international
market. It needs to buy new machinery and expand its current site. The directors of the company
want to go public but some of the ordinary shareholders are reluctant to turn from a private
limited company to a public limited company.

a. Define a limited company. [2]

b. Outline two reasons why some of the shareholders are reluctant to become a public
limited company. [6]

c. Explain two differences between private and public limited companies. [4]

d. Do you think that TM Textiles Pvt. Ltd should go public or take a loan from a bank to
finance its expansion? [6]

e. Do you think that Sam should engage a partner or carry on working as a sole trader and
hire more employees instead? Justify your answer. [6]