Registered partnership business

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Reference no: EM132250817

Andy, Ruben, Richie and Solomon were good friends. In 2006 they registered a partnership business. Each one brought in RM200,000 into the partnership. With a capital of RM800,000 in total, they started a restaurant named ‘Yummy Yummy Restaurant’.

In 2014 the business faced cash-flow problem. Andy decided to put in RM200,000 into the partnership. Unfortunately, cash-flow is still very tight. The four partners decided to cut cost by reducing the number of employees. As a result, the workload on existing employees became heavier. The following employees were unhappy with the restaurant:

- Molly was required to work 15 days on a row without any rest day in between.

- Chef Baker was no longer allowed public holidays since the restaurant was busiest during this time.

- Nanny was only given 30 days maternity leave.

- Sally was not paid overtime rate whenever they worked above their normal working hours.

- Fred’s rest break was reduced from one hour to 30 minutes during an eight hour work shift.

Recently Andy, Ruben, Richie and Solomon began to quarrel. Each partner blamed the others for the decline in business. Solomon claimed that business was down because Richie secretly started a cafe that competed with Yummy Yummy Restaurant.

Consider the following issues based on the case study.

Andy regrets running the restaurant under a partnership. He thinks that it would have been better if he had incorporated a company. Do you agree? Justify your reason.

Andy insists that the RM100,000 that he put into the partnership is a loan and not capital. Richie and Solomon disagrees.

(a) In your view, is the RM200,000 a loan or capital?

(b) If we assume that Andy, Ruben, Richie and Solomon were shareholders of a company, would the RM200,000 be considered a loan or capital?

Based on your knowledge of the Employment Act 1955, do the following employees have legitimate complaints against the restaurant?

(a) Molly

(b) Chef Baker

(d) Sally

(e) Fred

4. Was Richie entitled to set up a business that competed with Yummy Yummy Restaurant?

Reference no: EM132250817

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