Ask three different questions about a business
Who owns it? Who makes a particular decision? Who is the legal person concerned? These questions can have different answers. A manager need not own shares, and a trading name need not be a separate entity. The fictional cards below help you read those distinctions before interpreting a liability statement.
The Kenyan Business Registration Service describes a business name as distinct from a legal entity, explains the unpaid-share basis of a company limited by shares, and identifies a registered LLP as a body corporate separate from its partners. Those narrow points were checked on 6 October 2026. The cases are educational comparisons, not advice on choosing a structure, registration, taxation, debts or a real dispute.
Three original organisation cards
| Card | Entity and ownership facts | Decision roles | Liability information supplied |
|---|---|---|---|
| A: Reed Desk Service | A sole proprietor, Adult A, uses this registered business name. No company or LLP is stated. | Adult A owns and approves service commitments; an assistant records bookings. | The proprietor is personally responsible for the business debts. The name is not another legal person. |
| B: Patternbox Limited | A company limited by shares. Member B holds 60 shares; Member C holds 40. Each share has a stated KSh 100 amount. | The board sets the fictional operating policy; Manager M schedules work within it. M holds no shares. | B has paid KSh 75 per share; C has paid KSh 100 per share. The card limits member liability in their capacity as members to amounts unpaid on their shares. |
| C: Cedar Layout LLP | A registered LLP with Partners D and E; the LLP is the separate body corporate. | Under the supplied internal arrangement, D coordinates projects and E checks outputs. The LLP is the named party to the fictional supply obligation. | The ordinary LLP obligation is stipulated to be the LLP’s obligation. No separate personal undertaking or wrongdoing is alleged. |
Use the role information exactly as supplied. It does not establish all powers a real board, manager or partner could have. The share amounts are classroom figures, not registration charges or recommended investments. The LLP card does not use shares and gives no unpaid-share calculation; importing the company formula would invent a rule.
Worked case 1: a new name does not create a second person
An answer says, “Reed Desk Service owes the amount, so Adult A has no connection with the debt.” That confuses the trading label with a separate legal entity. Card A expressly identifies a sole proprietor and states personal responsibility. The corrected answer links the trading name back to Adult A rather than drawing two independent legal-person boxes.
The booking assistant does not become the owner merely by receiving an enquiry. The card gives the assistant a recording task and reserves approval of service commitments to A. We can explain these supplied roles; we cannot decide an unprovided contract dispute from the assistant’s job title. If the question asks who approved a particular order and no approval record exists, the answer is “not established by this card.”
Worked case 2: calculate the unpaid amount, then stop
For Member B, unpaid amount per share is KSh 100 − KSh 75 = KSh 25. Across 60 shares, that is 60 × KSh 25 = KSh 1,500. For C, the unpaid amount is 40 × (KSh 100 − KSh 100) = KSh 0. The combined unpaid amount on these members’ shares is KSh 1,500.
This calculation answers the card’s member-capacity question. It does not say that the company’s own debts are capped at KSh 1,500 or that a creditor will receive precisely that amount. Nor does it promise immunity from separate guarantees, misconduct or other legal responsibilities. Those issues require facts and law outside this exercise. “Limited liability” needs its subject and basis stated, not just the word “limited.”
Member B holds 60 of the 100 shares, but the card does not give voting rights or authority to override operating policy. The supported ownership proportion is 60%; a claim that B personally schedules every job is contradicted by M’s stated role. Ownership and day-to-day work must be read separately.
Worked case 3: keep the LLP and its partners distinct
A learner copies the company calculation into Cedar Layout LLP: “There are two partners, so divide the supply obligation equally.” Nothing in Card C authorises that division. It names the LLP as the party concerned and supplies no share capital, unpaid-share amount or rule splitting the obligation between partners.
The correct diagram places the LLP in its own entity box and labels D and E by their project and checking roles. Separate legal personality explains why naming a partner is not automatically the same as naming the entity. It does not prove that a partner can never have personal responsibility. The supplied case deliberately excludes separate undertakings and allegations, so no conclusion about those situations is needed.
How to read an unfamiliar organisation card
- Underline the stated form and the named legal person. Do not infer them from a logo, shop size or impressive title.
- List owners or members separately from directors, managers and assistants.
- Connect each decision to the rule or role supplied. Leave unstated authority unresolved.
- Identify whose liability is being discussed and the capacity in which they act.
- Calculate only a limit the card actually defines. State what the result does not establish.
A large workplace can still use a proprietor’s trading name; a small enterprise can be incorporated. Size does not settle entity status. Similarly, seeing “partner” used casually in an advertisement is insufficient to identify a registered LLP. In these exercises the cards provide the structure explicitly, so there is no need to investigate a real organisation or submit a registration request.
Three solved practice tasks
Practice 1: follow the trading name
Task: Adult F operates “Page Repair” as a sole proprietor. A clerk answers messages, but F approves jobs. Identify the owner, trading name and approver. Answer: F is the proprietor, Page Repair is the trading label, and F is the stated approver. The clerk’s communication work does not establish ownership or approval power.
Practice 2: check a different share card
Task: Member G holds 30 shares of stated KSh 200 each and has paid KSh 160 per share. Use the same unpaid-share rule. Answer: KSh 40 is unpaid per share; 30 × 40 = KSh 1,200. Report this as the unpaid amount under the member-capacity rule, not the company’s debt total or a complete prediction of recovery.
Practice 3: identify missing evidence
Task: An LLP card names Partner H as its output checker. It does not state who may approve new service commitments. Can you assign that power to H? Answer: No. Checking quality and authorising commitments are different roles. Ask for the relevant authority statement or decision record; neither the word “partner” nor the checking task answers this specific question.
Frequently asked questions
Is a registered business name a separate legal person?
A business name itself is not a separate legal entity. In the sole-proprietor card, identify the proprietor behind the name rather than treating the label as another person.
Does a company manager have to own shares?
Not in these supplied arrangements. Manager M owns no shares and still performs the scheduling role assigned by the company card.
Does fully paid mean the company owes nothing?
No. It means nothing is unpaid on the stated shares. The company can have obligations separate from that member-capacity calculation.
Can I use ownership percentage to infer every decision right?
No. A percentage describes the stated shares. Specific voting rights, reserved decisions and operating authority need their own evidence.
Is an LLP the same as a company limited by shares?
They both can have separate legal personality, but the forms are not interchangeable. The LLP card provides no share-based member-liability calculation.
Does this lesson decide personal guarantees or misconduct?
No. The examples do not supply those facts and make no promise of personal immunity. A real case requires appropriate current professional guidance.
Which structure should a real owner choose?
These cards do not answer that question. They teach entity and role distinctions, not registration, tax, financing or legal recommendations.
References
Business Registration Service: entity distinctions. The teaching cases, questions, tables and answers are original.
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