In recent years, fishing has been growing to be a popular recreational activity for Singaporeans. More youngsters are taking it up as a sport, in part influenced by social media. To leverage this emerging trend, Arthur and Charlie (who are friends since university days) have decided to open a fishing facility in the East side of Singapore. The fishing facility will house four large ponds that allow people to catch live fish, prawns, crabs and lobsters. Fishing rods, baits and other equipment can be rented at the facility counter.

Arthur has about five years of experience working in the fishing industry, and is also an avid sportsman who loves fishing. Charlie currently has a full-time accounting job and will leave the day-to-day running of the proposed business to Arthur, though he will provide business and financial expertise where needed. Arthur wants to be rewarded for his effort and time spent in running the new business. The business will need some initial capital to obtain appropriate premises to house the fishing facility and the necessary inventory and equipment such as fresh seafood and fishing tools and gears. Arthur and Charlie will each invest $20,000.

Arthur and Charlie are worried about their liability if the business fails. They also prefer not to spend too much time on paper work while running this business. If the business takes off and is successful, they would consider expanding in future by setting up more fishing facilities in Singapore. They realise that they might not have enough money and will need to raise funds for this expansion if it happens.

Arthur and Charlie are unsure of the form of business entity to adopt. They have come to you for advice.

(a) Define a general partnership, limited liability partnership, and company. Explain the differences among these business entities in terms of their legal status, annual statutory

requirements and tax treatment.

(40 marks)

(b) Explain which form of business entity is most suitable for them, and the benefits and drawbacks of that choice. In your answer, you are expected to address Arthur and

Charlie's key concerns and requirements.

(c) Discuss why the other two business entities are not as suitable as the one which you

have selected in (b).

(20 marks)

Cite relevant statutory provisions and/or case law to support your answer. You are NOT required to discuss limited partnership in your answer.