Carmelita, a young Grenadian entrepreneur, has been running a business as a sole trader for about two years, designing and selling greetings cards and home accessories (such as aprons and placemats) online. It has been very successful, and she has established a loyal client base. A recent valuation has indicated that the business is worth about US$220,000.

Carmelita has been looking into incorporating the business as a private limited company and taking on a couple of employees to help with packaging and keeping the accounts up to date. She has come to you for advice about, amongst other things, the process of incorporation. She is aware that certain documentation is required and that a company is required to have articles of association. Carmelita will be both a shareholder and a director of the company. She is proposing to call the company Great Grenadian Accessories.

Advise Carmelita:

1.

on the steps to be taken to incorporate the business, as a private limited company, including in relation to the name; (9 marks)

2.

on the nature and purpose of the articles of association; (5 marks)

3.

how her liability as a shareholder will compare to that of a sole trader (6 marks)