Answer to Question #189530 in Economics for ntombi mshango

Question

Which of the following statements is a disadvantage of a close corporation?

1 It does not enjoy continuity.

2 A juristic person may not be a member.

3 There is a potential of conflict between partners.

4 Members do not enjoy the benefits of limited liability

Answer 1

A close corporation is generally a smaller corporation that elects close corporation status and is therefore entitled to operate without the strict formalities normally required in the operation of standard corporations. Many small-business owners find this benefit invaluable. In essence, a close corporation is a corporation whose shareholders and directors are entitled to operate much like a partnership.

So, the correct answer is 4.