Rwanda - Enterprise Survey 2011

A firm's legal status is information well known for the target respondent: CEO, General Manager or owner of the firm.
ENUMERATORS DO NOT NEED TO KNOW THE DEFINITION OF EACH TYPE OF LEGAL STATUS.

A firm's legal status is first determined by whether participation on ownership is by shares (first 2 options) or not (options 3 and 4). The fifth option is a combination of the previous ones.

If a firm's shares are publicly traded, it is a shareholding company with shares traded in the stock market. If the shares are not traded or they are traded only privately it is a shareholding company with shares traded privately. A shareholding company with shares traded privately is a firm that is owned by partners or shareholders for whom their claims over the firm are not publicly traded. They may or may not be traded privately. In both of these categories firms have limited liability.

A sole proprietorship is a business owned and operated by one individual natural person. A natural person is a real human being, as opposed to an artificial legal entity such as a corporation or organization that the law treats for some purposes as if it were a person distinct from its members or owner(s).

A firm's legal status defines the extent of the liability which defines the level of responsibility of the owner over the firm's obligations. Under limited liability each owner is only responsible for the proportion of his/her shares.

A partnership allows two or more people to share profits and liabilities, with or without privately held shares. In a partnership, the parties could be individuals, corporations, trusts, other partnerships, or a combination of all of the above. The essential characteristic of this partnership is the unlimited liability of every partner.

Limited partnership is a legal form that includes one or several general partners and one or more limited partners who invest capital into the partnership, but do not take part in the daily operation or management of the business. The limited partners limit their amount of liability to the amount of capital invested in the partnership. The general partners personally shoulder all debts and obligations of the partnership. Business operations are governed, unless otherwise specified in a written agreement, by majority vote of voting partners. Limited liability partnerships are separate legal entities that provide liability protection for all general partners as well as management rights in the business.

Cooperatives and state owned firms should be designated as Other. When other is chosen, the actual form of legal status must be specified in writing by the enumerator on the survey instrument.