CS Executive Setting up of Business Entities and Closure Syllabus

Setting up of Business Entities and Closure syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Setting up of Business Entities and Closure in CS Executive, not a summary of it.

1. 1

   Types of Business Entities

   4 topics

   • Sole Proprietorship
   • Partnership
   • Limited Liability Partnership
   • Companies
2. 2

   Setting up of Business Entities

   3 topics

   • Procedure for Incorporation
   • Post-Incorporation Compliances
   • Licenses and Registrations
3. 3

   Closure of Business

   3 topics

   • Modes of Winding Up
   • Insolvency and Bankruptcy Code
   • Liquidation Process

Setting up of Business Entities and Closure flashcards for CS Executive

18 of 51 cards from the Setting up of Business Entities and Closure deck — real questions with worked answers.

1. Who is the sole owner, manager, and beneficiary in a Sole Proprietorship?

   A single individual (the proprietor) who owns all assets, controls the business, bears all liabilities, and takes all profits.

2. What is the nature of the proprietor's liability in a Sole Proprietorship?

   Unlimited and personal — the proprietor's personal assets can be used to satisfy business debts; there is no separation between the owner and the business.

3. Does a Sole Proprietorship have a separate legal entity from its owner?

   No. It has no separate legal existence; the business and the proprietor are legally the same person.

4. Define 'Partnership' under Section 4 of the Indian Partnership Act, 1932.

   The relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

5. What are the three essential elements of a partnership under the Indian Partnership Act, 1932?

   (1) An agreement between persons, (2) to share profits of a business, and (3) the business is carried on by all or any of them acting for all (mutual agency).

6. What is the maximum number of partners allowed in a partnership firm?

   100 partners (as prescribed under Rule 10 of the Companies (Miscellaneous) Rules, 2014; Section 464 of the Companies Act, 2013).

7. Is registration of a partnership firm compulsory under the Indian Partnership Act, 1932?

   No, registration is optional, but an unregistered firm faces disabilities — e.g., it cannot sue third parties or partners to enforce contractual rights (Section 69).

8. What is the key consequence of non-registration of a partnership firm under Section 69?

   The firm cannot file a suit to enforce a right arising from a contract against a third party, and a partner cannot sue the firm or co-partners to enforce rights from the partnership contract.

9. What document governs the rights and duties of partners in a partnership?

   The Partnership Deed (the agreement among partners). In its absence, provisions of the Indian Partnership Act, 1932 apply.

10. What law governs a Limited Liability Partnership in India?

    The Limited Liability Partnership Act, 2008.

11. What is the key advantage of an LLP over a traditional partnership?

    Partners have limited liability (limited to their agreed contribution) and the LLP is a separate legal entity with perpetual succession; one partner is not liable for another partner's wrongful acts.

12. What is the minimum number of partners and designated partners required for an LLP?

    Minimum 2 partners; at least 2 designated partners, of whom at least one must be a resident in India. There is no upper limit on partners.

13. Does an LLP have perpetual succession and a separate legal entity?

    Yes. An LLP is a body corporate with a separate legal entity and perpetual succession, distinct from its partners; changes in partners do not affect its existence.

14. What is the registration/incorporation document of an LLP, and which authority maintains it?

    The LLP Agreement and incorporation documents are filed with the Registrar of Companies (ROC); the LLP is incorporated under the MCA (Ministry of Corporate Affairs).

15. Define a 'Company' under Section 2(20) of the Companies Act, 2013.

    A company means a company incorporated under the Companies Act, 2013 or under any previous company law.

16. What are the salient features of a company as a separate legal entity (per Salomon v. Salomon)?

    A company is a distinct legal person separate from its members, with perpetual succession, capacity to own property, sue and be sued in its own name, limited liability, and a common seal (optional).

17. What is the minimum and maximum number of members in a Private Company?

    Minimum 2 members and maximum 200 members (excluding present/past employee-members).

18. What is the minimum number of members in a Public Company and a One Person Company (OPC)?

    Public company: minimum 7 members (no maximum). OPC: exactly 1 member.

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