(a) Explain the following terms:
(i) goodwill
(ii) patents
(iii) trade mark
(iv) copyright
(b) State four factors that could lead to the dissolution of a limited liability company
Explanation
(a) Explanation of terms used in business:
(i) Goodwill: Is a term which describes the value of business connections and reputation acquired over the years. It is an intangible asset of the business.
(ii) Patents: This is the exclusive right of an inventor of a product over his invention in order to prevent others from copying the invention once it is dully registered.
(iii) Trade Mark: This is a distinctive name or symbol given to a product which is dully registered to prevent another person from using it.
(iv) Copy right: This is the exclusive right granted to artists, musicians and authors to prevent their works from being copied or reproduced without prior permission.
(b) Factors that can lead to the dissolution of companies:
(i) If the owners pass a resolution to wind up.
(ii) If the company owes than it can afford to pay/insolvency not bankruptcy.
(iii) If the creditors of the company decide to apply to court for its dissolution.
(iv) If the management continuously has problems and cannot jointly run their business.
(v) If the purpose for which the company was formed becomes illegal or expires.
(vi) If the court decides to close the company.
(vii) If the government decides to close the company.
(viii) If the company fails to comply with statutory provisions such as failure to commence business within a year of incorporation.