In Singapore there are different types of entities which undertake business transactions. The law treats each entity differently. These entities fall into two broad categories: Unincorporated and Incorporated. In the next few article, we will touch on unincorporated business entities. The 3 types of unincorporated business entities we will discuss are sole proprietorship (SP), partnership and joint venture (JV). In addition, we will briefly touch on the new hybrid entity, the limited liability partnership (LLP) which have the features of both unincorporated partnership and a incorporated private limited companies .
Before we go on, it may be useful for us to understand the concept of incorporation in greater detail. Through incorporation, an entity is made to become a separate legal body which has its own legal rights and obligations. Generally, the law recognises that only a natural person (i.e human being) can enjoy rights and owe obligations. By the process of incorporation, the law in effect creates an artificial entity which is also recognised as being capable of having legal rights and obligations. In contrast to natural person, such entities are called “artificial persons”.
As such, the incorporated entity, i.e the corporation will have an existence separate and independent from its founder. Once incorporated, the founders may retire or quit but the corporation will continue to exist. Even when the initial founder have died, the corporation will continue to function.
To be continue. Part 2
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