COMPANY LAW IN GHANA -: MODELS/ FORMS OF BUSINESS ORGANISATION- SOLE PROPRIETORSHIP AND PARTNERSHIP

Sole Proprietorship vs. Incorporated Private Partnership
Welcome, everyone! Today, we're breaking down the basics of business organizations in Ghana, focusing on two common models: the Sole Proprietorship and the Incorporated Private Partnership.
Part 1: The Starting Point - Factors of Production**
Every business starts with an idea and resources. In economics, these resources are called the **Factors of Production**:
*Land:* Natural resources.
*Labour:* Human effort and skills.
Capital:** The money and tools needed.
*Entrepreneur:* The person who brings it all together.

The entrepreneur's first major decision is choosing the right legal structure to channel these resources. This choice impacts liability, taxation, and how the business is run.

*Part 2: The One-Person Show - Sole Proprietorship*

This is the simplest and most common form of business.

*What is it?* A business entirely owned and managed by one person. There is no legal distinction between the owner and the business. The owner enjoys all profits but also bears all losses and risks.

*Formation:* It's very easy and inexpensive to start. There are no formal legal requirements. However, if you operate under a name different from your own (e.g., "Kofi's Tech Hub" instead of "Kofi Mensah"), you must register that business name with the Registrar under the *Registration of Business Act (Act 151)* within 14 days of starting.

*Key Legal Points (The Fine Print):*
*Registration ≠ Incorporation:* Registering your business name *does not* make it a separate legal entity. It only gives you the exclusive right to use that name.
As established in *Barclays Bank v Lartey*, you and your business are one and the same in the eyes of the law.
The business name itself has no monetary value and *cannot be sold* as a piece of property, as seen in the case of *Baidoo v Sam*.

*Closing Shop (Dissolution):* You can decide to close the business at any time. If you registered a business name, you must formally remove it from the register within three months. Crucially, you remain personally liable for all business debts incurred before the closure, like unpaid taxes or employee salaries.

*Pros & Cons:*
*Advantages:* Easy to set up, full control, and quick decision-making.
*Disadvantages:* *Unlimited Liability* (your personal assets, like your house or car, can be used to settle business debts). The business also has no continuity—it ends when you die or decide to stop.

*Part 3: Teaming Up - The Incorporated Private Partnership (IPP)*

When you want to go into business with others, the Incorporated Private Partnership is a common choice, governed by the **Incorporated Private Partnership Act (Act 152)**.

*What is it?* A formal association of *2 to 20 individuals* who jointly run a business **for profit**. It's more than just co-owning property; the key is the active intention to run a business together.

*Formation: Registration is MANDATORY.* You must register by submitting a partnership agreement and a detailed statement to the Registrar. The Registrar can refuse registration for several reasons, including if the business is unlawful, the name is misleading, or a partner is ineligible (e.g., a minor, an undischarged bankrupt, or a company).

*The Legal Twist: A Hybrid Structure*
Upon registration, the partnership becomes a **body corporate**—a legal entity separate from its partners. This means the firm can sue, be sued, and own property in its own name.
*However, and this is crucial, the partners have joint and several unlimited liability* for the firm's debts. So while the firm is a separate entity, creditors can still come after the partners' personal assets if the firm's assets aren't enough.

*The Danger of Not Registering:* Operating an unregistered partnership is illegal. An unregistered firm *cannot enforce any rights* in court. For example, in *In Re Sasu Twum*, a wife could not claim her share of a shop run with her husband because their partnership was never registered.

*Ending the Partnership:* A partnership ends through a formal process of winding-up and dissolution, which can be voluntary, by court order, or due to insolvency.

*Pros & Cons:*
*Advantages:* Separate legal identity for the firm and business continuity even if a partner leaves or dies.
Disadvantage:Unlimited liability for the partners** persists, which is the biggest financial risk.
Conclusion
Choosing between a Sole Proprietorship and an Incorporated Private Partnership hinges on your appetite for risk and your need for collaboration.
Sole Proprietorship: Offers total control but with total personal risk.
Incorporated Private Partnership: Allows for shared effort and resources and has a separate legal identity, but the partners' personal assets are still on the line.
See you in the next video