MRL2601 ENTREPRENEURIAL LAW EXAM PACK
2026/2027 | Companies Act 71 of 2008 | Close
Corporations | Partnerships | Business Trusts | UNISA LLB
| Verified Answers | Pass Guaranteed - A+ Graded
Section 1: Introduction to Entrepreneurial Law & Business
Structures (Q1-15)
Question 1 Thabo operates a small tuck shop in Soweto. He has not registered any
business entity and operates the business in his own name. His personal assets are at
risk if the business incurs debt. Which business structure best describes Thabo's
arrangement?
A. A private company under the Companies Act 71 of 2008
B. A close corporation under the Close Corporations Act 69 of 1984
C. A sole proprietorship with unlimited personal liability and no separate legal
personality [CORRECT]
D. A partnership with joint and several liability
Rationale: A sole proprietorship is the simplest business form where the owner and
business are legally indistinguishable. There is no separate legal personality, and the
owner has unlimited liability for business debts. Thabo operates in his own name
without registration, which is characteristic of a sole proprietorship. A private
company (Option A) and close corporation (Option B) both have separate legal
personality and require registration. A partnership (Option D) requires at least two
persons with a contractual relationship.
Correct Answer: C
Question 2 Which of the following is NOT a characteristic of a company incorporated
under the Companies Act 71 of 2008?
,A. Separate legal personality distinct from its shareholders
B. Limited liability for shareholders
C. Perpetual succession
D. Unlimited liability for directors [CORRECT]
Rationale: A company has separate legal personality (Salomon v Salomon), limited
liability (shareholders' liability limited to unpaid shares), and perpetual succession
(continues despite changes in ownership). Directors do not have unlimited liability by
virtue of their office—their liability arises from breach of fiduciary duties, reckless
trading, or fraudulent conduct under sections 76 and 77. Shareholders (not directors)
enjoy limited liability as a core characteristic.
Correct Answer: D
Question 3 A group of five medical doctors wishes to establish a practice together.
They want to share profits and losses but maintain personal liability protection.
Which structure is most appropriate?
A. A universal partnership of all present and future property
B. A personal liability company (Inc.) under section 8(2)(c) of the Companies Act
[CORRECT]
C. A close corporation
D. An en commandite partnership
Rationale: A personal liability company (Inc.) is specifically designed for
professionals (attorneys, accountants, engineers, doctors) who wish to practice
together. Directors have joint and several liability for company debts, but the
corporate structure provides organizational benefits. Close corporations (Option C)
cannot be formed after 2011 and were limited to natural persons. A universal
partnership (Option A) exposes all partners to unlimited liability. An en commandite
partnership (Option D) has limited partners who cannot participate in management.
Correct Answer: B
,Question 4 Which statement correctly distinguishes a profit company from a non-
profit company under the Companies Act 71 of 2008?
A. A profit company must distribute all profits to shareholders annually
B. A non-profit company is incorporated for public benefit and its income and
property may not be distributed to its members or directors except as reasonable
compensation for services rendered [CORRECT]
C. A non-profit company cannot engage in any commercial activities
D. A profit company must have at least 7 directors
Rationale: A non-profit company (NPC) is incorporated for public benefit or other
object relating to cultural or social activities, and its income and property are not
distributable to members or directors except as reasonable compensation (section 1
read with section 10). NPCs can engage in commercial activities to fund their objects
(Option C is incorrect). Profit companies need not distribute all profits (Option A)—
retained earnings are permitted. Director numbers (Option D) vary by company type,
not profit status.
Correct Answer: B
Question 5 A state-owned company is established under the Companies Act 71 of
2008. Which statement is correct?
A. State-owned companies are exempt from all provisions of the Companies Act
B. A state-owned company is a juristic person under section 2(1) and is subject to the
Companies Act, but the Public Finance Management Act 1 of 1999 also applies
[CORRECT]
C. State-owned companies cannot enter into contracts
D. State-owned companies have no separate legal personality
Rationale: State-owned companies (SOCs) are companies incorporated under the
Companies Act (section 2(1)) with the state as majority shareholder. They have
separate legal personality and are subject to the Companies Act, but additional
legislation (PFMA, King IV, relevant sector legislation) also applies. They can enter
contracts (Option C is incorrect) and have separate legal personality (Option D is
incorrect). Exemption from the Act (Option A) is incorrect.
, Correct Answer: B
Question 6 Which of the following business entities does NOT have separate legal
personality under South African law?
A. A private company registered under the Companies Act 71 of 2008
B. A close corporation registered under the Close Corporations Act 69 of 1984
C. A partnership under the common law [CORRECT]
D. A public company registered under the Companies Act 71 of 2008
Rationale: A partnership is a contractual relationship between two or more persons
for a common business purpose. It does not have separate legal personality—the
partners are the legal persons who own property, enter contracts, and incur liability.
Companies (Options A and D) and close corporations (Option B) are all juristic
persons with separate legal personality under their respective statutes.
Correct Answer: C
Question 7 A public company is defined in the Companies Act 71 of 2008. Which
requirement distinguishes a public company from a private company?
A. A public company must have at least 7 shareholders
B. A public company may offer its shares to the public and must have at least 3
directors (unless MOI provides otherwise) [CORRECT]
C. A public company cannot be listed on a stock exchange
D. A public company must have unlimited liability
Rationale: A public company (Ltd) may offer shares to the public and is subject to
greater regulatory requirements (section 19(3)). It must have at least 3 directors
unless the MOI provides otherwise (section 66(1)). There is no minimum shareholder
requirement (Option A is incorrect). Public companies are designed for listing
(Option C is incorrect). Liability is limited (Option D is incorrect).
Correct Answer: B
2026/2027 | Companies Act 71 of 2008 | Close
Corporations | Partnerships | Business Trusts | UNISA LLB
| Verified Answers | Pass Guaranteed - A+ Graded
Section 1: Introduction to Entrepreneurial Law & Business
Structures (Q1-15)
Question 1 Thabo operates a small tuck shop in Soweto. He has not registered any
business entity and operates the business in his own name. His personal assets are at
risk if the business incurs debt. Which business structure best describes Thabo's
arrangement?
A. A private company under the Companies Act 71 of 2008
B. A close corporation under the Close Corporations Act 69 of 1984
C. A sole proprietorship with unlimited personal liability and no separate legal
personality [CORRECT]
D. A partnership with joint and several liability
Rationale: A sole proprietorship is the simplest business form where the owner and
business are legally indistinguishable. There is no separate legal personality, and the
owner has unlimited liability for business debts. Thabo operates in his own name
without registration, which is characteristic of a sole proprietorship. A private
company (Option A) and close corporation (Option B) both have separate legal
personality and require registration. A partnership (Option D) requires at least two
persons with a contractual relationship.
Correct Answer: C
Question 2 Which of the following is NOT a characteristic of a company incorporated
under the Companies Act 71 of 2008?
,A. Separate legal personality distinct from its shareholders
B. Limited liability for shareholders
C. Perpetual succession
D. Unlimited liability for directors [CORRECT]
Rationale: A company has separate legal personality (Salomon v Salomon), limited
liability (shareholders' liability limited to unpaid shares), and perpetual succession
(continues despite changes in ownership). Directors do not have unlimited liability by
virtue of their office—their liability arises from breach of fiduciary duties, reckless
trading, or fraudulent conduct under sections 76 and 77. Shareholders (not directors)
enjoy limited liability as a core characteristic.
Correct Answer: D
Question 3 A group of five medical doctors wishes to establish a practice together.
They want to share profits and losses but maintain personal liability protection.
Which structure is most appropriate?
A. A universal partnership of all present and future property
B. A personal liability company (Inc.) under section 8(2)(c) of the Companies Act
[CORRECT]
C. A close corporation
D. An en commandite partnership
Rationale: A personal liability company (Inc.) is specifically designed for
professionals (attorneys, accountants, engineers, doctors) who wish to practice
together. Directors have joint and several liability for company debts, but the
corporate structure provides organizational benefits. Close corporations (Option C)
cannot be formed after 2011 and were limited to natural persons. A universal
partnership (Option A) exposes all partners to unlimited liability. An en commandite
partnership (Option D) has limited partners who cannot participate in management.
Correct Answer: B
,Question 4 Which statement correctly distinguishes a profit company from a non-
profit company under the Companies Act 71 of 2008?
A. A profit company must distribute all profits to shareholders annually
B. A non-profit company is incorporated for public benefit and its income and
property may not be distributed to its members or directors except as reasonable
compensation for services rendered [CORRECT]
C. A non-profit company cannot engage in any commercial activities
D. A profit company must have at least 7 directors
Rationale: A non-profit company (NPC) is incorporated for public benefit or other
object relating to cultural or social activities, and its income and property are not
distributable to members or directors except as reasonable compensation (section 1
read with section 10). NPCs can engage in commercial activities to fund their objects
(Option C is incorrect). Profit companies need not distribute all profits (Option A)—
retained earnings are permitted. Director numbers (Option D) vary by company type,
not profit status.
Correct Answer: B
Question 5 A state-owned company is established under the Companies Act 71 of
2008. Which statement is correct?
A. State-owned companies are exempt from all provisions of the Companies Act
B. A state-owned company is a juristic person under section 2(1) and is subject to the
Companies Act, but the Public Finance Management Act 1 of 1999 also applies
[CORRECT]
C. State-owned companies cannot enter into contracts
D. State-owned companies have no separate legal personality
Rationale: State-owned companies (SOCs) are companies incorporated under the
Companies Act (section 2(1)) with the state as majority shareholder. They have
separate legal personality and are subject to the Companies Act, but additional
legislation (PFMA, King IV, relevant sector legislation) also applies. They can enter
contracts (Option C is incorrect) and have separate legal personality (Option D is
incorrect). Exemption from the Act (Option A) is incorrect.
, Correct Answer: B
Question 6 Which of the following business entities does NOT have separate legal
personality under South African law?
A. A private company registered under the Companies Act 71 of 2008
B. A close corporation registered under the Close Corporations Act 69 of 1984
C. A partnership under the common law [CORRECT]
D. A public company registered under the Companies Act 71 of 2008
Rationale: A partnership is a contractual relationship between two or more persons
for a common business purpose. It does not have separate legal personality—the
partners are the legal persons who own property, enter contracts, and incur liability.
Companies (Options A and D) and close corporations (Option B) are all juristic
persons with separate legal personality under their respective statutes.
Correct Answer: C
Question 7 A public company is defined in the Companies Act 71 of 2008. Which
requirement distinguishes a public company from a private company?
A. A public company must have at least 7 shareholders
B. A public company may offer its shares to the public and must have at least 3
directors (unless MOI provides otherwise) [CORRECT]
C. A public company cannot be listed on a stock exchange
D. A public company must have unlimited liability
Rationale: A public company (Ltd) may offer shares to the public and is subject to
greater regulatory requirements (section 19(3)). It must have at least 3 directors
unless the MOI provides otherwise (section 66(1)). There is no minimum shareholder
requirement (Option A is incorrect). Public companies are designed for listing
(Option C is incorrect). Liability is limited (Option D is incorrect).
Correct Answer: B
