Companies law

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(August 2010)

Companies law (or the law of business associations) is the field of law concerning companies and other business organizations. This includes corporations, partnerships and other associations which usually carry on some form of economic or charitable activity. The most prominent kind of company, usually referred to as a "corporation", is a " juristic person", i.e. it has separate legal personality, and those who invest money into the business have limited liability for any losses the company makes, governed by corporate law. The largest companies are usually publicly listed on stock exchanges around the world. Even single individuals, also known as sole traders may incorporate themselves and limit their liability in order to carry on a business. All different forms of companies depend on the particular law of the particular country in which they reside. The law of business organizations originally derived from the common law of England, but has evolved significantly in the 20th century. In common law countries today, the most commonly addressed forms are:
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Corporation Limited company Unlimited company Limited liability partnership Limited partnership Not-for-profit corporation Partnership Sole Proprietorship

The proprietary limited company is a statutory business form in several countries, including Australia. Many countries have forms of business entity unique to that country, although the are re equivalents elsewhere. Examples are the Limited-liability company (LLC) and the limited liability limited partnership (LLLP) in the United States. Other types of business organizations, such as cooperatives, credit unions and publicly owned enterprises, can be established with purposes that parallel, supersede, or even r place the e profit maximization mandate of business corporations. For a country-by-country listing of officially recognized forms of business organization, see Types of business entity. There are various types of company that can be formed in different jurisdictions, but the most common forms of company are:

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a company limited by guarantee. Commonl used where companies are formed for non-commercial purposes, such as clubs or charities. The members guarantee the payment of certain (usually nominal amounts if the company goes into insol ent li uidation, but otherwise they have no economic rights in relation to the company . a company limited by guarantee with a share capital. A hybrid entity, usually used where the company is formed for non-commercial purposes, but the activities of the company are partly funded by investors who expect a return. a company limited by shares. The most common form of company used for business ventures. an unlimited company either with or without a share capital. This is a hybrid company, a company similar to its limited company ( td.) counterpart but where the members or shareholders do not benefit from limited liability should the company ever go into formal li uidation.

There are, however, many specific categories of corporations and other business organi ations which may be formed in various countries and jurisdictions throughout the world.

Contents
[hide]
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1 companies law 2 Companies law theory 3 Companies law study 4 ee also 5 otes 6 References 7 External links

[edit] US companies law

In the nited tates, corporations are generally incorporated, or organi ed, under the laws of a particular state. The corporate law of a corporation's state of incorporation generally governs that corporation's internal governance (even if the corporation's operations take place outside of that state). The corporate laws of the various states differ - in some cases significantly - from state to state. Because of these differences, corporate lawyers are often consulted in an effort to determine the most appropriate or advantageous state in which to incorporate, and a majority of public companies in the . . are Delaware corporations.[1] The federal laws of the nited tates and local law may also be applicable sources of corporate law.

[edit] Companies law theory

A corporation is described to be a person in a political capacity created by the law, to endure in perpetual succession.[2] Americans in the 1790s knew of a variety of corporations established for various purposes, including those of commerce, education, and religion. As

the law of corporations was articulated by the upreme Court under Chief Justice Marshall, over the first several decades of the new American state, emphasis fell, in a way which seems natural to us today, upon commercial corporations. onetheless, Wilson believed that, in all cases, corporations should be erected with caution, and inspected with care. The actions of corporations were clearly circumscribed: To every corporation a name must be assigned; and by that name alone it can perform legal acts. For non-binding external actions or transactions, corporations enjoyed the same latitude as private individuals; but it was with an eye to internal affairs that many saw principal advantage in incorporation. The power of making by-laws was tacitly annexed to corporations by the very act of their establishment.[2] While they must not directly contradict the overarching laws of the land, the central or local government cannot be expected to regulate toward the peculiar circumstances of a given body, and so they are invested with authority to make regulations for the management of their own interests and affairs.[2] The question then arises: if corporations are to be inspected with care, what - if not the commercial or social conduct, or the by-laws - is to be inspected and by whom? Do corporations have duties? Yes: The general duties of every corporation may be collected from the nature and design of its institution: it should act agreeably to its nature, and fulfill the purposes for which it was formed.[2] Who sees that corporations are living up to those duties? The law has provided proper persons with proper powers to visit those institutions, and to correct every irregularity, which may arise within them.[2] The Common aw provided for inspection by the court of kings bench. In 1790, at least, the powers of the court of king's bench [were] vested in the supreme court of Pennsylvania.[2] As for the dissolution of corporations, there seems not to have been much question that a corporation might surrender its legal existence into the hands of that power, from which it was received. From such a surrender, the dissolution of the body corporate ensues.[2] or does there seem to have been much question that by a judgment of forfeiture against a corporation itself, it may be dissolved.[2] However, upreme Court Justice Wilson, lecturing in his unofficial capacity, at least, suggests his displeasure with the doctrine that corporate dissolution cannot be predicated by a judgment of ouster against individuals. God forbid such is the sentiment of Mr. Justice Wilmot that the rights of the body should be lost or destroyed by the offenses of the members.[2] As theorists such as Ronald Coase have pointed out, all business organi ations represent an attempt to avoid certain costs associated with doing business. Each is meant to facilitate the contribution of specific resources - investment capital, knowledge, relationships, and so forth - towards a venture which will prove profitable to all contributors. Except for the partnership, all business forms are designed to provide limited liability to both members of the organi ation and external investors. Business organi ations originated with agency law, which permits an agent to act on behalf of a principal, in exchange for the principal assuming equal liability for the wrongful acts committed by the agent. For this reason, all partners in a typical general partnership may be held liable for the wrongs committed by one partner. Those forms that provide limited liability are able to do so because the state provides a mechanism by which businesses that follow certain guidelines will be able to escape the full liability imposed under agency law. The state provides these forms because it has an interest in the strength of the companies that provide jobs and services therein, but also has an interest in monitoring and regulating their behavior.

[edit] Companies law study

Law schools typically offer either a single upper level course on business organi ations, or offer several courses covering different aspects of this area of law. The area of study examines issues such as how each major form of business entity may be formed, operated, and dissolved; the degree to which limited liability protects investors; the extent to which a business can be held liable for the acts of an agent of the business; the relative advantages and disadvantages of different types of business organi ations, and the structures established by governments to monitor the buying and selling of ownership interests in large corporations. The basic theory behind all business organi ations is that, by combining certain functions within a single entity, a business (usually called a firm by economists) can operate more efficiently, and thereby reali e a greater profit. Governments seek to facilitate investment in profitable operations by creating rules that protect investors in a business from being held personally liable for debts incurred by that business, either through mismanagement, or because of wrongful acts committed by the business.

Corporation
From Wikipedia, the free encyclopedia This article is about business corporations. For other uses, see Corporation (disambiguation). "Corporate" redirects here. For the Bollywood film, see Corporate (film).

A corporation is a legal entity that is created under the laws of a state designed to establish the entity as a separate legal entity having its own privileges and liabilities distinct from those of its members.[1] There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter (i.e. by an ad hoc act passed by a parliament or legislature). Most jurisdictions now allow the creation of new corporations through registration. An important (but not universal) contemporary feature of a corporation is limited liability. If a corporation fails, shareholders normally only stand to lose their investment and employees will lose their jobs, but neither will be further liable for debts that remain owing to the corporation's creditors. Despite not being natural persons, corporations are recogni ed by the law to have rights and responsibilities like natural persons ("people"). Corporations can exercise human rights against real individuals and the state,[2] and they can themselves be responsible for human rights violations.[3] Corporations are conceptually immortal but they can "die" when they are "dissolved" either by statutory operation, order of court, or voluntary action on the part of shareholders. Insolvency may result in a form of corporate 'death', when creditors force the liquidation and dissolution of the corporation under court order,[4] but it most often results in a restructuring of corporate holdings. Corporations can even be convicted of criminal offenses, such as fraud and manslaughter.[5] Although corporate law varies in different jurisdictions, there are four core characteristics of the business corporation:[6]
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Legal personality Limited liability Transferable shares Centralized management under a board structure

Contents
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1 History o 1.1 Mercantilism o 1.2 Modern corporations 2 Corporate law o 2.1 Ownership and control o 2.2 Formation

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31F and non- ofit 3 2 Closely held corporations and publicly traded corporations 3 3 Mutual benefit corporations 4 Corporations globally o 4 1 Australia o 4 2 Brazil o 4 3 Canada o 4 4 German-speaking countries o 4 5 Italy o 4 6 Japan o 4 7 Spain o 4 8 United Kingdom o 4 9 United States 5 Corporate taxation 6 Criticisms 7 Other business entities 8 See also 9 Notes 10 References 11 Further reading 12 External links
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[edit] History
Main articles: History of corporations and ist of oldest companies
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The word "corporation" derives from corpus, the Latin word for body, or a "body of people." Entities which carried on business and were the subjects of legal rights were found in ancient Rome, and the Maurya Empire in ancient India.[7] In medieval Europe, churches became incorporated, as did local governments, such as the Pope and the City of London Corporation. The point was that the incorporation would survive longer than the lives of any particular

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member, existing in perpetuity. The alleged oldest commercial corporation inthe world, the Stora Kopparberg mining community in Falun, Sweden, obtained a charter from King Magnus Eriksson in 1347. Many European nations chartered co rporations to lead colonial ventures, such as the Dutch East India Company or the Hudson's Bay Company, and these corporations came to play a large part in the history of corporate colonialism.

Corporate mapping

During the time of colonial expansion in the 17th century, the true progenitors of the modern corporation emerged as the "chartered company". Acting under a charter sanctioned by the Dutch government, the Dutch East India Company (VOC) defeated Portuguese forces and established itself in the Moluccan Islands in order to profit from the European demand for spices. Investors in the VOC were issued paper certificates as proof of share ownership, and were able to trade their shares on the original Amsterdam stock exchange. Shareholders are also explicitly granted limited liability in the company's royal charter.[8] In the late 18th century, Stewart Kyd, the author of the first treatise on corporate law in English, defined a corporation as,
a collection of many individuals united into one body under a special denomination, having perpetual succession under an artificial form, and vested, by policy of the law, with the capacity of acting, in several respects, as an individual, particularly of taking and granting property, of contracting obligations, and of suing and being sued, of enjoying privileges and immunities in common, and of exercising a variety of political rights, more or less extensive, according to the design of its institution, or the powers conferred upon it, either at the time of its creation, or at any subsequent period of its existence
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[edit] Mercantilism See also: Mercantilism and South Sea Bubble

A bond issued by the Dutch East India Company, dating from 1623, for the amount of 2,400 florins

Labeled by both contemporaries and historians as "the grandest society of merchants in the universe",[citation needed] the British East India Company would come to symbolize the dazzlingly rich potential of the corporation, as well as new methods of business that could be both brutal and exploitive.[10] On 31 December 1600, the English monarchy granted the company a 15-year monopoly on trade to and from the East Indies and Africa. By 1611, shareholders in the East India Company were earning an almost 150%return on their investment. Subsequent stock offerings demonstrated just how lucrative the Company had become. Its first stock offering in 1613-1616 raised 418,000, and its first offering in 16171622 raised 1.6 million.[11] In the United States, government chartering began to fall out of vogue in the mid-19th century. Corporate law at the time was focused on protection of the public interest, and not on the interests of corporate shareholders. Corporate charters were closely regulated by the states. Forming a corporation usually required an act of legislature. Investors generally had to be given an equal say in corporate governance, and corporations were required to comply with the purposes expressed in their charters. Many private firms in the 19th century avoided the corporate model for these reasons (Andrew Carnegie formed his steel operation as a limited partnership, and John D. Rockefeller set up Standard Oil as a trust). Eventually, state governments began to realize the greater corporate registration revenues available by providing more permissive corporate laws. New Jersey was the first state to adopt an [12] "enabling" corporate law, with the goal of attracting more business to the state. Delaware followed, and soon became known as the most corporation -friendly state in the country after New Jersey raised taxes on the corporations, driving them out. New Jersey reduced t ese h taxes after this mistake was realized, but by then it was too late; even today, most major public corporations in the United States are set up under Delaware law. By the beginning of the 19th century, government policy on both sides of the Atlantic be gan to change, reflecting the growing popularity of the proposition that corporations were riding the economic wave of the future. In 1819, the U.S. Supreme Court granted corporations a [13] plethora of rights they had not previously recognized or enjoyed. Corporate charters were deemed "inviolable", and not subject to arbitrary amendment or abolition by state governments.[14] The Corporation as a whole was labeled an "artificial person," possessing both individuality and immortality.[15]

At around the same time, British legislation was similarly freeing the corporation from historical restrictions. In 1844 the British Parliament passed the Joint Stock Companies Act, which allowed companies to incorporate without a royal charter or an Act of Parliament.[16] Ten years later, limited liability, the key provision of modern corporate law, passed into English law: in response to increasing pressure from newly emerging capital interests, Parliament passed the Limited Liability Act of 1855, which established the principle that any corporation could enjoy limited legal liability on both contract and tort claims simply by [17] registering as a "limited" company with the appropriate government agency. This prompted the English periodical The Economist to write in 1855 that "never, perhaps, was a change so vehemently and generally demanded, of which the importance was so much overrated."[18] The glaring inaccuracy of the second part of this judgment was recognized by the same magazine more than 75 years later, when it claimed that, "[t]he economic historian of the future . . . may be inclined to assign to the nameless inventor of the principle of limited liability, as applied to trading corporations, a place of honour with Watt and Stephenson, and other pioneers of the Industrial Revolution."[19]
[edit] Modern corporations

By the end of the 19th century the Sherman Act, New Jersey allowing holding companies, and mergers resulted in larger corporations with dispersed shareholders. (See The Modern Corporation and Private Property [20] The well-known Santa Clara County v. Southern Pacific Railroad decision began to influence policymaking and the modern corporate era had begun. The 20th century saw a proliferation of enabling law across the world, which helped to drive economic booms in many countries before and after World War I. Starting in the 1980s, many countries with large state-owned corporations moved toward privatization, the selling of publicly owned services and enterprises to corporations.Deregulation (reducing the regulation of corporate activity) often accompanied privatization as part of alaissez-faire policy. Another major postwar shift was toward the development of conglomerates, in which large corporations purchased smaller corporations to expand their industrial base. Japanese firms developed a horizontal conglomeration model, the keiretsu, which was later duplicated in other countries as well.[21]

[edit] Corporate law

Main article: Corporate law

Companies law

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Corporate governance Limited liability ltra vires Business judgment rule Internal affairs doctrine De facto corporation and corporation by estoppel Piercing the corporate veil Rochdale Principles
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Contract Civil procedure

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The existence of a corporation requires a special legal framework and body of law that specifically grants the corporation legal personality, and typically views a corporation as a fictional person, a legal person, or a moral person (as opposed to a natural person). Corporate statutes typically empower corporations to own property, sign binding contracts, and pay taxes in a capacity separate from that of its shareholders (who are sometimes referred to as "members"). According to Lord Chancellor Haldane,
...a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must conse uently be sought in the person of somebody who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation.
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The legal personality has two economic implications. First it grants creditors (as opposed to shareholders or employees) priority over the corporate assets upon liquidation. econd, corporate assets cannot be withdrawn by its shareholders, nor can the assets of the firm be taken by personal creditors of its shareholders. The second feature requires special legislation and a special legal framework, as it cannot be reproduced via standard contract law.[23] The regulations most favorable to incorporation include:

Regulation
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Description nlike a partnership or sole proprietorship, shareholders of a modern business corporation have "limited" liability for the corporation's debts and obligations.[24] As a result, their losses cannot exceed the amount which they contributed to the corporation as dues or payment for shares. This enables corporations to "socialize their costs" for the primary benefit of shareholders; to socialize a cost is to spread it to society in general.[25] The economic rationale for this is that it allows anonymous trading in the shares of the corporation, by eliminating the corporation's creditors as a stakeholder in such a transaction. Without limited liability, a creditor would probably not allow any share to be sold to a buyer at least as creditworthy as the seller. Limited liability further allows corporations to raise large amounts of finance for their enterprises by combining funds from many owners of stock. Limited liability reduces the amount that a shareholder can lose in a company. This increases the attraction to potential shareholders, and thus increases both the number of willing shareholders and the amount they are likely to invest. However, some jurisdictions also permit another type of corporation, in which shareholders' liability is unlimited, for example the unlimited liability corporation in two provinces of Canada, and the unlimited company in the nited Kingdom. Another advantage is that the assets and structure of the corporation may continue beyond the lifetimes of its shareholders and bondholders. This allows stability and the accumulation of capital, which is thus available for investment in larger and longerlasting projects than if the corporate assets were subject to dissolution and distribution. This was also important in medieval times, when land donated to the Church (a corporation) would not generate the feudal fees that a lord could claim upon a landholder's death. In this regard, see Statute of Mortmain. (However a corporation can be dissolved by a government authority, putting an end to its existence as a legal entity. But this usually only happens if the company breaks the law, for example, fails to meet annual filing re uirements, or in certain circumstances if the company re uests dissolution.)
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Limited liability

Perpetual lifetime

Persons and other legal entities composed of persons (such as trusts and other corporations) can have the right to vote or receive dividends once declared by the board of directors. In the case of for-profit corporations, these voters hold shares of stock and are thus called shareholders or stockholders. When no stockholders exist, a corporation may exist as a nonstock corporation (in the nited Kingdom, a "company limited by guarantee") and instead of having stockholders, the corporation has members who have the right to vote on its operations. Voting members are not the only members of a "Corporation". The members of a non-stock corporation are identified in the Articles of Incorporation ( K equivalent: Articles of Association) and the titles of the member classes may include "Trustee," "Active," "Associate," and/or "Honorary." However, each of these listed in the Articles of Incorporation are members of the Corporation. The Articles of Incorporation may define the "Corporation" by another name, such as "The ABC Club, Inc." and, in which case, the

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"Corporation" and "The ABC Club, Inc." or just "The Club" are considered synonymous and interchangeable as they may appear elsewhere in the Articles of Incorporation or the ByLaws. If the non-stock corporation is not operated for profit, it is called a not-for-profit corporation. In either category, the corporation comprises a collective of individuals with a distinct legal status and with special privileges not provided to ordinary unincorporated businesses, to voluntary associations, or to groups of individuals. There are two broad classes of corporate governance forms in the world. In most of the world, control of the corporation is determined by a board of directors which is elected by the shareholders. In some jurisdictions, such as Germany, the control of the corporation is divided into two tiers with a supervisory board which elects a managing board. Germany is also unique in having a system known as co-determination in which half of the supervisory board consists of representatives of the employees. The CEO, president, treasurer, and other titled officers are usually chosen by the board to manage the affairs of the corporation. In addition to the limited influence of shareholders, corporations can be controlled (in part) by creditors such as banks. In return for lending money to the corporation, creditors can demand a controlling interest analogous to that of a member, including one or more seats on the board of directors. In some jurisdictions, such as Germany and Japan, it is standard for banks to own shares in corporations whereas in other jurisdictions such as the nited tates, under the Glass teagall Act of 1933, and the nited Kingdom, under the Bank of England, banks are prohibited from owning shares in external corporations. However, since 1999 in the . ., commercial banks have been allowed to enter into investment banking through separate subsidiaries thanks to the Financial ervices Moderni ation Act or Gramm-Leach-Bliley Act. ince 1997, banks in the . K. are supervised by the Financial ervices Authority; its rules are non-restrictive allowing both foreign and domestic capital to operate all financial institutions, including insurance, commercial and financial banking.[26] pon the Board's decision to dissolve a for-profit corporation, shareholders receive the leftovers, following creditors and others with interests in the corporation. However shareholders receive the benefit of limited liability, so they are liable only for the amount they contributed.
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Historically, corporations were created by a charter granted by government. Today, corporations are usually registered with the state, province, or national government and regulated by the laws enacted by that government. Registration is the main prerequisite to the corporation's assumption of limited liability. The law sometimes requires the corporation to designate its principal address, as well as a registered agent (a person or company designated to receive legal service of process). It may also be required to designate an agent or other legal representative of the corporation. Generally, a corporation files articles of incorporation with the government, laying out the general nature of the corporation, the amount of stock it is authori ed to issue, and the names and addresses of directors. Once the articles are approved, the corporation's directors meet to create bylaws that govern the internal functions of the corporation, such as meeting procedures and officer positions.

The law of the jurisdiction in which a corporation operates will regulate most of its internal activities, as well as its finances. If a corporation operates outside its home state, it is often required to register with other governments as a foreign corporation, and is almost always subject to laws of its host state pertaining to employment, crimes, contracts, civil actions, and the like.
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Corporations generally have a distinct name. Historically, some corporations were named after their membership: for instance, "The President and Fellows of Harvard College." owadays, corporations in most jurisdictions have a distinct name that does not need to make reference to their membership. In Canada, this possibility is taken to its logical extreme: many smaller Canadian corporations have no names at all, merely numbers based on a registration number (for example,, "12345678 Ontario Limited"), which is assigned by the provincial or territorial government where the corporation incorporates. In most countries, corporate names include a term or an abbreviation that denotes the corporate status of the entity (for example, "Incorporated" or "Inc." in the nited tates) or the limited liability of its members (for example, "Limited" or "Ltd."). These terms vary by jurisdiction and language. In some jurisdictions they are mandatory, and in others they are not.[27] Their use puts everybody on constructive notice that they are dealing with an entity whose liability is limited, and does not reach back to the persons who own the entity: one can only collect from whatever assets the entity still controls when one obtains a judgment against it. ome jurisdictions do not allow the use of the word "company" alone to denote corporate status, since the word "company" may refer to a partnership or some other form of collective ownership (in the nited tates it can be used by a sole proprietorship but this is not generally the case elsewhere).
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In many jurisdictions, corporations whose shareholders benefit from limited liability are required to publish annual financial statements and other data, so that creditors who do business with the corporation are able to assess the creditworthiness of the corporation and cannot enforce claims against shareholders.[28] hareholders therefore sacrifice some loss of privacy in return for limited liability. This requirement generally applies in Europe, but not in Anglo-American jurisdictions, except for publicly traded corporations, where financial disclosure is required for investor protection.
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The nature of the corporation continues to evolve in response to new situations as existing corporations promote new ideas and structures, the courts respond, and governments issue new regulations. A question of long standing is that of diffused responsibility. For example, if a corporation is found liable for a death, how should culpability and punishment for it be allocated among shareholders, directors, management and staff, and the corporation itself? ee corporate liability, and specifically, corporate manslaughter.

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The law differs among jurisdictions, and is in a state of flux. Some argue that shareholders should be ultimately responsible in such circumstances, forcing them to consider issues other than profit when investing, but a corporation may have millions of small shareholders who know nothing about its business activities. Moreover, traders especially hedge funds [29] may turn over shares in corporations many times a day. The issue of corporate repeat offenders (see H. Glasbeak, "Wealth by Stealth: Corporate Crime, Corporate Law, and the Perversion of Democracy", ISBN 978-1896357416, Between the Lines Press: Toronto 2002) raises the question of the so-called "death penalty for corporations."[30]

[edit] Types
This section needs additional itations fo e ifi ation. Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (February
2009)

For a list of types of corporation and other business types by country, see Types of business entity.

Most corporations are registered with the local jurisdiction as either a stock corporation or a non-stock corporation. Stock corporations sell stock to generate capital A stock corporation . is generally a for-profit corporation. A non-stock corporation does not have stockholders, but may have members who have voting rights in the corporation. Some jurisdictions (Washington, D.C., for example) separate corporations into for-profit and non-profit, as opposed to dividing into stock and non -stock. Several states also allow a variation of the corporation for use by professionals (i.e., those individuals typically considered as professionals who require a license from the state to conduct business). In some states, such as Georgia, these corporations are known as "professional corporations".
[edit] For-profit and non-profit Main article: non-profit organization

In modern economic systems, conventions of corporate governance commonly appear in a wide variety of business and non-profit activities. Though the laws governing these creatures of statute often differ, the courts often interpret provisions of the law that apply to profitmaking enterprises in the same manner (or in a similar manner) when applying principles to non-profit organizations as the underlying structures of these two types of entity often resemble each other.
[edit] Closely eld corporations and publicly traded corporations

This section does not ite an efe en e s o sources. Please help improve this section by adding citations to reliable sources. Unsourced material may be challenged and removed.
(November 2009)

It has been suggested that this section be split into a new article titled closely held

It has been suggested that this section be split into a new article titled publicly traded corporation. (Discuss

The institution most often referenced by the word "corporation" is a publicly traded corporation, the shares of which are traded on a public stock exchange (for example,, the New York Stock Exchange or Nasdaq in the United States) where shares of stock of corporations are bought and sold by and to the general public. Most of the largest businesses in the world are publicly traded corporations. However, the majority of corporations are said to be closely held, privately held or close corporations, meaning that no ready market exists for the trading of shares. Many such corporations are owned and managedby a small group of businesspeople or companies, although the size of such a corporation can be as vast as the largest public corporations. Closely held corporations do have some advantages over publicly traded corporations. A small, closely held company can often make company-changing decisions much more rapidly than a publicly traded company. A publicly traded company is also at the mercy of the market, having capital flow in and out based not only on what the company is doing but the market and even what the competitors are doing. Publicly traded companies also have advantages over their closely held counterparts. Publicly traded companies often have more working capital and can delegate debt throughout all shareholders. This means that people invested in a publicly traded company will each take a much smaller hit to their own capital as opposed to those involved with a closely held corporation. Publicly traded companies though suffer from this exact advantage. A closely held corporation can often voluntarily take a hit to profit with little to no repercussions (as long as it is not a sustained loss). A publicly traded company though often comes under extreme scrutiny if profitand growth are not evident to stock holders, thus stock holders may sell, further damaging the company. Often this blow is enough to make a small public company fail. Often communities benefit from a closely held company more so than from a public company. A closely held company is far more likely to stay in a single place that has treated them well, even if going through hard times. The shareholders can incur some of the damage the company may receive from a bad year or slow period in the company profits.Closely held companies often have a better relationship with workers. In larger, publicly traded companies, often when a year has gone badly the first area to feel the effects are the work force with lay offs or worker hours, wages or benefits being cut. A gain, in a closely held business the shareholders can incur this profit damage rather than passing it to the workers. The affairs of publicly traded and closely held corporations are similar in many respects. The main difference in most countries is that publicly traded corporations have the burden of complying with additional securities laws, which (especially in the U.S.) may require additional periodic disclosure (with more stringent requirements), stricter corporate governance standards, and additional procedural obligations in connection with major corporate transactions (for example, mergers) or events (for example, elections of directors). A closely held corporation may be a subsidiary of another corporation (its parent company), which may itself be either a closely held or a public corporation. In some jurisdictions, the

corporation. (Discuss

subsidiary of a listed public corporation is also defined as a public corporation (for example,, Australia).

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A mutual benefit nonprofit corporation is a corporation formed in the nited tates solely for the benefit of its members. An example of a mutual benefit nonprofit corporation is a golf club. Individuals pay to join the club, memberships may be bought and sold, and any property owned by the club is distributed to its members if the club dissolves. The club can decide, in its corporate bylaws, how many members to have, and who can be a member. Generally, while it is a nonprofit corporation, a mutual benefit corporation is not a charity. Because it is not a charity, a mutual benefit nonprofit corporation cannot obtain 501(c)(3) status. If there is a dispute as to how a mutual benefit nonprofit corporation is being operated, it is up to the members to resolve the dispute since the corporation exists to solely serve the needs of its membership and not the general public.[31]

[edit] Corporations globally

Main article Multinational corporation
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Following on the success of the corporate model at a national level, many corporations have become transnational or multinational corporations: growing beyond national boundaries to attain sometimes remarkable positions of power and influence in the process of globali ing. The typical "transnational" or "multinational" may fit into a web of overlapping shareholders and directorships, with multiple branches and lines in different regions, many such subgroupings comprising corporations in their own right. Growth by expansion may favor national or regional branches; growth by acquisition or merger can result in a plethora of groupings scattered around and/or spanning the globe, with structures and names which do not always make clear the structures of shareholder ownership and interaction. In the spread of corporations across multiple continents, the importance of corporate culture has grown as a unifying factor and a counterweight to local national sensibilities and cultural awareness.
[ di ] Au r li Main article Corporations Act 2001
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In Australia corporations are registered and regulated by the Commonwealth Government through the Australian ecurities and Investments Commission. Corporations law has been largely codified in the Corporations Act 2001.
[ di ] Br zil
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In Brazil there are many different types of legal entities ("sociedades"), but the two most common ones commercially speaking are: (i) "sociedade limitada", identified by "Ltda." or "Limitada" after the company's name, equivalent to the British limited liability company, and (ii) "sociedade annima" or "companhia", identified by "S.A." or "Companhia" in the company's name, equivalent to the British public limited company. The "Ltda." is mainly

governed by the new Civil Code, enacted in 2002, and the "S.A." by the Law 6.404 dated December 15, 1976, as amended.
[ di ] d Main article Canadian corporation
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In Canada both the federal government and the provinces have corporate statutes, and thus a corporation may have a provincial or a federal charter. Many older corporations in Canada stem from Acts of Parliament passed before the introduction of general corporation law. The oldest corporation in Canada is the Hudson's Bay Company; though its business has always been based in Canada, its Royal Charter was issued in England by King Charles II in 1670, and became a Canadian charter by amendment in 1970 when it moved its corporate headquarters from London to Canada. Federally recognized corporations are regulated by the Canada Business Corporations Act.
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[ di ] G r - p ki g c u ri Main article Aktiengesellschaft

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Germany, Austria, Switzerland and Liechtenstein recognize two forms of corporation: the Aktiengesellschaft (AG), analogous to public corporations in the English-speaking world, and the Gesellschaft mit beschrnkter Haftung (GmbH), similar to (and an inspiration for) the modern limited liability company.
[ di ] I l

The Italian Republic recognizes three types of company with limited liability: "S.r.l", or "Societ a responsabilit limitata" (a private limited company), "S.p.A" or "Societ per Azioni" (a joint-stock company, similar to a Public Limited Company in the nited Kingdom), and "S.a.p.a" ("Societ in Accomandita per Azioni"). The latter is a hybrid form that involves two categories of shareholders, some with and some without limited liability, and is rarely used in practice.
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[ di ] J p

In Japan, both the state and local public entities under the Local Autonomy Law (prefectures and municipalities) are considered to be corporations ( h jin?). on-profit corporations may be established under the Civil Code. The term "company" ( kaisha?) is used to refer to business corporations. The predominant form is the kabushiki kaisha ( ), used by public corporations as well as smaller enterprises. Mochibun kaisha ( ), a form for smaller enterprises, are becoming increasingly common. Between 2002 and 2008, the intermediary corporation ( ch kan h jin?) existed to bridge the gap between for-profit companies and nongovernmental and non-profit organizations.

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In Spain there are two types of companies: with limited liability called "S.L", or "Sociedad Limitada" (a private limited company) and "S.A." or "Sociedad Annima" (similar to a Public Limited Company).
[ di ] U i d Ki gd Main article K company law

In the nited Kingdom, 'corporation' most commonly refers to a body corporate formed by Royal Charter or by statute, of which few now remain. The BBC is the oldest and best known corporation within the K that is still in existence. Others, such as the British Steel Corporation, were privatized in the 1980s. In the private sector, corporations are referred to as companies, and are regulated by the Companies Act 2006 (or the orthern Ireland equivalent). The most common type of company is the private limited company ("Limited" or "Ltd."). Private limited companies can either be limited by shares or by guarantee. Other corporate forms include the public limited company ("PLC") and the private unlimited company, and companies limited by guarantee. A special type of corporation is a corporation sole, which is an office held by an individual natural person (the incumbent), but which has a continuing legal entity separate from that person: an example is a Church of England bishopric
[ di ] U i d S See also Delaware corporation

Several types of conventional corporations exist in the nited States. Generically, any business entity that is recognized as distinct from the people who own it (i.e., is not a sole proprietorship or a partnership) is a corporation. This generic label includes entities that are known by such legal labels as association, organization and limited liability company, as well as corporations proper. Only a company that has been formally incorporated according to the laws of a particular state is called corporation. A corporation was defined in the Dartmouth College case of 1819, in which Chief Justice Marshall of the nited States Supreme Court stated that " A corporation is an artificial being, invisible, intangible, and existing only in contemplation of the law". A corporation is a legal entity, distinct and separate from the individuals who create and operate it. As legal entity the corporation can acquire, own, and dispose of property in its own name like buildings, land and equipment. It can also incur liabilities and enter into contracts like franchising and leasing. American corporations can be either profit-making companies or non-profit entities. Tax-exempt non-profit corporations are often called 501(c)3 corporation, after the section of the Internal Revenue Code that addresses the tax exemption for many of them. The federal government can only create corporate entities pursuant to relevant powers in the .S. Constitution. For example, Congress has constitutional power to provide postal services, so it has power to operate the nited States Postal Service. Although the federal government could theoretically preempt all state corporate law under the courts' current expansive

[ di ] Sp i

interpretation of the Commerce Clause, it has chosen not to do so. As a result, much of American corporate law continues to be a matter of state law under the Tenth Amendment to the nited States Constitution. Thus, virtually all corporations in the .S. are incorporated under the laws of a particular state. All states have some kind of "general corporation law" (California, Delaware, Kansas, evada and Ohio actually use that exact name) which authorizes the formation of private corporations without having to obtain a charter for each one from the state legislature (as was formerly the case in the 19th century). Many states have separate, self-contained laws authorizing the formation and operation of certain specific types of corporations that are wholly independent of the state general corporation law. For example, in California, nonprofit corporations are incorporated under the onprofit Corporation Law, and in Illinois, insurers are incorporated under the Illinois Insurance Code. Corporations are created by filing the requisite documents with a particular state government. The process is called incorporation, referring to the abstract concept of clothing the entity with a "veil" of artificial personhood (embodying, or corporating it, corpus being the Latin word for body). Only certain corporations, including banks, are chartered. Others simply file their articles of incorporation with the state government as part of a registration process. Once incorporated, a corporation has artificial personhood everywhere it may operate, until such time as the corporation may be dissolved. A corporation that operates in one state while being incorporated in another is a foreign corporation. This label also applies to corporations incorporated outside of the nited States. Foreign corporations must usually register with the secretary of states office in each state to lawfully conduct business in that state. A corporation is legally a citizen of the state (or other jurisdiction) in which it is incorporated (except when circumstances direct the corporation be classified as a citizen of the state in which it has its head office, or the state in which it does the majority of its business). Corporate business law differs dramatically from state to state. Many prospective corporations choose to incorporate in a state whose laws are most favorable to its business interests. Many large corporations are incorporated in Delaware, for example, without being physically located there because that state has very favorable corporate tax and disclosure laws. Companies set up for privacy or asset protection often incorporate in evada, which does not require disclosure of share ownership. Many states, particularly smaller ones, have modeled their corporate statutes after the Model Business Corporation Act, one of many model sets of law prepared and published by the American Bar Association. As juristic persons, corporations have certain rights that attach to natural persons. The vast majority of them attach to corporations under state law, especially the law of the state in which the company is incorporated since the corporations very existence is predicated on the laws of that state. A few rights also attach by federal constitutional and statutory law, but they are few and far between compared to the rights of natural persons. For example, a corporation has the personal right to bring a lawsuit (as well as the capacity to be sued) and, like a natural person, a corporation can be libeled.

But a corporation has no constitutional right to freely exercise its religion because religious exercise is something that only "natural" persons can do. That is, only human beings, not business entities, have the necessary faculties of belief and spirituality that enable them to possess and exercise religious beliefs. Harvard College (a component of Harvard niversity), formally the President and Fellows of Harvard College (also known as the Harvard Corporation), is the oldest corporation in the western hemisphere. Founded in 1636, the second of Harvards two governing boards was incorporated by the Great and General Court of Massachusetts in 1650. Significantly, Massachusetts itself was a corporate colony at that time owned and operated by the Massachusetts Bay Company (until it lost its charter in 1684) - so Harvard College is a corporation created by a corporation. Many nations have modeled their own corporate laws on American business law. Corporate law in Saudi Arabia, for example, follows the model of ew York State corporate law. In addition to typical corporations in the nited States, the federal government, in 1971 passed the Alaska ative Claims Settlement Act (A CSA), which authorized the creation of 12 regional native corporations for Alaska atives and over 200 village corporations that were entitled to a settlement of land and cash. In addition to the 12 regional corporations, the legislation permitted a 13th regional corporation without a land settlement for those Alaska atives living out of the State of Alaska at the time of passage of A CSA.

[edit] Corporate taxation

Main article Corporate tax

In many countries corporate profits are taxed at a corporate tax rate, and dividends paid to shareholders are taxed at a separate rate. Such a system is sometimes referred to as "double taxation", because any profits distributed to shareholders will eventually be taxed twice. One solution to this (as in the case of the Australian and K tax systems) is for the recipient of the dividend to be entitled to a tax credit which addresses the fact that the profits represented by the dividend have already been taxed. The company profit being passed on is therefore effectively only taxed at the rate of tax paid by the eventual recipient of the dividend. In other systems, dividends are taxed at a lower rate than other income (for example, in the S) or shareholders are taxed directly on the corporation's profits and dividends are not taxed (for example, S corporations in the S).

[edit] Criticisms
Main article Criticisms of corporations

As Adam Smith pointed out in the Wealth of ations, when ownership is separated from management (i.e. the actual production process required to obtain the capital), the latter will inevitably begin to neglect the interests of the former, creating dysfunction within the company.[32] Some maintain that recent events in corporate America may serve to reinforce Smith's warnings about the dangers of legally protected collectivist hierarchies.[33]

Limited company
From Wikipedia, the free encyclopedia

Companies law
Company Business

Compan forms

Sole proprietorship Partnership (General imited Corporation Cooperative

P)

nited tates

S corporation C corporation Delaware corporation Nevada corporation Massachusetts business trust Delaware statutory trust

P Series

/ reland / Commonwealth

Limited compan (by shares by guarantee Public Proprietary)

Unlimited company Community interest company

European Union / EEA

SE SCE SPE EEIG

Elsewhere

AB AG A S A/S AS GmbH K.K. .V. Oy S.A. more

Doctrines

Corporate governance Limited liability Ultra vires Business judgment rule Internal affairs doctrine De facto corporation and corporation by estoppel Piercing the corporate veil Rochdale Principles

Related areas

Contract Civil procedure

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A limited company is a company in which the liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. And the former of these, a limited company limited by shares, may be further divided into public companies and private companies. Who may become a member of a private limited company is restricted by law and by the company's rules. In contrast anyone may buy shares in a public limited company.

Limited companies can be found in most countries, although the detailed rules governing them vary widely. It is also common for a distinction to be made between the publicly tradable companies of plc type (for example, the German Aktiengesellschaft (AG), Czech a.s. and the Mexican, French and Polish S.A.), and the "private" types of company (such as the German GmbH, Polish Sp. z o.o., the Czech s.r.o. and Slovak s. s r.o.).

Contents
[hide]
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1 Kinds 1.1 Private company limited by guarantee 1.2 Private company limited by shares 1.3 Public limited company 2 In specific countries o 2.1 Ireland and the United Kingdom o 2.2 Australia o 2.3 United States 3 See also 4 References 5 External links
o o o

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[edit] Kinds
[ di ] Priv c p li i d b gu r Main article Private company limited by guarantee

A company that does not have share capital, but is guaranteed by its members who agree to pay a fixed amount in the event of the company's liquidation. Charitable organisations often incorporate using this form of limited liability. Another example is the Financial Services Authority. In Australia, only an unlisted public company can be limited by guarantee.[1]
[ di ] Priv c p li i d b h r Main article Private company limited by shares

Has shareholders with limited liability and its shares may not be offered to the general public. Shareholders of private companies limited by shares are often bound to offer the shares to their fellow shareholders prior to selling them to a third party.
[ di ] Public li i d c p Main article Public limited company

Public limited companies can be publicly traded on a stock exchange similar to the .S. Corporation (Corp.) and the German Aktiengesellschaft (AG).

[edit] In speci ic countries

In the nited Kingdom or Republic of Ireland it is a corporation with shareholders whose liability is limited by shares (Ltd), which is the most common form of privately held company. Setting up as a limited company is an attractive option for many people as, unlike sole proprietorships, personal assets are distinct from company finances. The registration of companies in Great Britain (England, Scotland, and Wales) is done through Companies House. In Canada, a person wishing to register a limited company must file Articles of Incorporation with either their provincial government or the federal government.[2] Registration of companies in Australia is done through the Australian Securities and Investments Commission (ASIC).[3] The registration of companies in orthern Ireland has been the responsibility of Department of Enterprise, Trade and Investment. From 1 October 2009 responsibility transfers to Companies House, under the Department for Business Enterprise and Regulatory Reform (BERR).[4] orthern Ireland will retain a registry function and presence along similar lines to the Companies House Scotland model. This means that the office will remain in Belfast and it will retain the Registrar for orthern Ireland.

[ di ] Au r li

The private company equivalent in Australia is the Proprietary Limited company (Pty Ltd). An Australian company with just Limited or Ltd at the end of its name is a public company, such as a company listed on the ASX (although public companies can be, and often are, unlisted). Australia does not have a direct equivalent to the plc. A shareholder in a limited company, in the event of its becoming insolvent (equivalent to bankruptcy in the .S.) would be liable to contribute the amount remaining unpaid on the shares (usually zero, as most shares are issued fully paid). 'Paid' here relates to the amount paid to the company for the shares on first issue, and not to be confused with amounts paid by one shareholder to another to transfer ownership of shares between them. A shareholder is thus afforded limited liability.
[ di ] U i d S

In the nited States the expression corporation is preferred to limited company (because corporations there have limited liability). A limited liability company (LLC) is a different entity. However, some states permit corporations to have the designation Ltd (instead of the usual Inc.) to signify their corporate status.

[ di ] Ir l

d h U i d Ki gd

Unlimited company
From Wikipedia, the free encyclopedia

Companies law
Company Business

Company forms

Sole proprietorship Partnership (General Limited LLP) Corporation Cooperative

United States

S corporation C corporation LLC LLLP Series LLC Delaware corporation Nevada corporation Massachusetts business trust Delaware statutory trust

UK / Ireland / Commonwealth Limited company (by shares by guarantee Public Proprietary) Unlimited company

Community interest company

European Union / EEA

SE SCE SPE EEIG

Elsewhere

AB AG A S A/S AS GmbH K.K. .V. Oy S.A. more

Doctrines

Corporate governance Limited liability ltra vires Business judgment rule Internal affairs doctrine De facto corporation and corporation by estoppel Piercing the corporate veil Rochdale Principles

Related areas

Contract Ci il procedure

An unlimited company or pri ate unlimited company is a hybrid company incorporated either with or without a share capital (and similar to its limited company counterpart) but where the liability of the members or shareholders is not limited - that is, its members or shareholders have a joint, several and unlimited obligation to meet any insufficiency in the assets of the company in the event of the company's formal liquidation. The joint, several and unlimited liability of the members or shareholders of the company to meet any insufficiency in the assets of the company (to settle its outstanding liabilities if any exist) only applies upon the formal liquidation of the company. Therefore, prior to any such formal liquidation of the

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company, any creditors or security holders of the company may only have recourse to the assets of the company and not to those of its members or shareholders. ntil such event occurs (formal liquidation) - an unlimited company is similar with its counterpart the limited company where its members or shareholders have no direct liability to the creditors or security holders of the company during its normal course of business or existence. nlimited companies are found in the nited Kingdom, Ireland, Hong Kong, Pakistan, igeria, India, Australia, ew Zealand and other jurisdictions where the company law is derived from English law. They can also be found in Germany, France, Macao, Czech Republic and in two jurisdictions in CanadaAlberta and ova Scotiawhere they are called unlimited liability corporations. In the nited Kingdom they are formed or incorporated by registration under the Companies Act 2006. An unlimited company has the benefit and status of incorporation same as its limited company counterpart. Situations where an unlimited company will be preferred to an alternative business model or its limited company counterpart include:
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secrecy concerning financial affairs is desired, effectively shielding and protecting its financial affairs from its competitors and making them non-public information including shareholder dividend payments: a nited Kingdom unlimited company, unlike its limited company counterpart, is generally not required to publish or make public its company financial statements (file its annual financial accounts at Companies House)[1]. the company is trading in an area where limited liability is not acceptable, vital or practical. extending, in general, a greater assurance and confidence to creditors - in contrast to its limited company counterpart. there is a low risk of insolvency. the company or its trading activities has or generates sufficient capital, funds or financing without need to approach general lenders such as high-street retail banks. developing more advantageous company and business capital strategies in an ever increasing irreversible trend of bank disintermediation by companies and their management. a focused higher standard of board of directors and executive management behaviour (or probity) and business model for risk management. a flow-through entity is required for nited States federal tax purposes, under the entity classification rules.

Once formed or incorporated, an unlimited company can in some jurisdictions also re-register and designate itself to limited company status at any time with few formalities, the same also extends to a limited company which may at any time re-register and designate itself to an unlimited company status.

Contents
[hide]

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1 otable unlimited companies 2 Specific Countries o 2.1 nited States 3 References

[edit] Notable unlimited companies

The unlimited company is a not too common or perhaps well known or promoted form of company incorporation (due to the narrow focus of generic company formation registration agents) and is not always required under company law to add or state the word nlimited or its abbreviations ( nltd., or ltd.) at the ending of its legal company name, making it not easily recognizable, without first reviewing its certificate of incorporation or government registry status. However, a notable example in the nited Kingdom was the national subsidiary of the international retail clothing group C&A ( K company number 00524665). Other notable examples, amongst others, are the global trading British all-terrain vehicle manufacturer Land Rover ( K company number 04019301), GlaxoSmithKline Services nlimited ( K company number 01047315) part of the GlaxoSmithKline plc., global pharmaceutical group, The Equitable Life Assurance Society ( K company number 00037038), Credit Suisse International ( K company number 02500199) the nited Kingdom investment banking arm of the Credit Suisse Group and C. Hoare & Co ( K company number 00240822) England's oldest privately owned bank founded in 1672 by Sir Richard Hoare. Other notable global trading companies such as Mobil Producing igeria nlimited (a subsidiary of Exxon Mobil) and Texaco Overseas ( igeria) Petroleum Company nlimited (part of the merged Chevron and Texaco petroleum conglomerates) exist in igeria, amongst others. In the SA, another notable example is the American Express Company, which once was a publicly traded unlimited liability company, re-incorporating itself to a limited liability company status only in 1965. In Ireland, local subsidiaries of a number of nited States of America companies have registered as unlimited companies to shield their finances from public view.[2] Janssen Pharmaceutical, a subsidiary of its S parent company Johnson & Johnson re-registered as an unlimited company to avoid the requirement to file annual financial accounts at the Companies Registration Office (CRO) Ireland, thereby effectively also protecting a portion of Johnson & Johnson's financial information.[2] Apple Computer's Irish division did the same.[3]

Limited liability partnership

From Wikipedia, the free encyclopedia

Companies law
Company Business

Compan forms

Sole proprietorship Partnership (General imited LLP) Corporation Cooperative

nited tates

S corporation C corporation Delaware corporation Nevada corporation Massachusetts business trust Delaware statutory trust

P Series

/ reland / Commonwealth

imited company (by shares by guarantee Public Proprietary)

Unlimited company Community interest company

European nion / EEA

SE SCE SPE EEIG

Elsewhere

AB AG ANS A/S AS GmbH K.K. N.V. Oy S.A. more

Doctrines

Corporate governance imited liability Ultra vires Business judgment rule Internal affairs doctrine De facto corporation and corporation by estoppel Piercing the corporate veil Rochdale Principles

Related areas

Contract Ci il procedure

vde

This article ma require cleaning up to meet Wikipedia's qualit standards. Please improve this article if you can. The talk page may contain suggestions. (May 2008) (Consider using more
specific clean up instructions.)

This article is missing citations or needs footnotes. Please help add inline citations to guard against copyright violations and factual inaccuracies. (May 2008)

A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liability. It therefore exhibits elements of partnerships and corporations.[1] In an LLP one partner is not responsible or liable for another partner's misconduct or negligence. This is an important difference from that of an unlimited partnership. In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation.[2] In some countries, an LLP must also have at least one "general partner" with unlimited liability. nlike corporate shareholders, the partners have the right to manage the business directly. In contrast, corporate shareholders have to elect a board of directors under the laws of various state charters. The board organizes itself (also under the laws of the various state charters) and hires corporate officers who then have as "corporate" individuals the legal responsibility to manage the corporation in the corporation's best interest. An LLP also contains a different level of tax liability from that of a corporation. Limited liability partnerships are distinct from limited partnerships in some countries, which may allow all LLP partners to have limited liability, while a limited partnership may require at least one unlimited partner and allow others to assume the role of a passive and limited liability investor. As a result, in these countries the LLP is more suited for businesses where all investors wish to take an active role in management. There is considerable confusion between LLPs as constituted in the .S. and that introduced in the K in 2001 and adopted elsewhere - see below - since the K LLP is, despite the name, specifically legislated as a Corporate body rather than a Partnership.

Contents
[hide]

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1 ational variations o 1.1 Canada o 1.2 China o 1.3 Germany o 1.4 Greece o 1.5 India o 1.6 Japan o 1.7 Kazakhstan o 1.8 Poland o 1.9 Romania o 1.10 Singapore o 1.11 United Kingdom o 1.12 United States 2 See also 3 otes 4 External links

[edit] National variations

For a u er country-by-country listing o types o partnerships and companies, see Types o business entity.

The provinces of Quebec, Ontario, Manitoba, Alberta, ova Scotia, ew Brunswick, Saskatchewan, ewfoundland and Labrador and the orthwest territories (the only exceptions are Yukon, Prince Edward Island) have permitted LLPs for lawyers and accountants. In BC, the Partnership Amendment Act, 2004 (Bill 35) permitted LLPs for lawyers and other professionals as well businesses.[3]

[ di ] hi

In China, the LLP is known as a Special general partnership ( ). The organizational form is restricted to knowledge-based professions and technical service industries. The structure shields co-partners from liabilities due to the willful misconduct or gross negligence of one partner or a group of partners.

The German Partnerschaftsgesellschaft or PartG is an association of non-commercial professionals, working together. Though no corporate entity, it can sue and be sued, own property and act under the partnership's name. The partners, however, are jointly and severally liable for all the partnership's debts, except when only some partners' misconduct caused damages to another party - and then only if professional liability insurance is mandatory. The Partnerschaftsgesellschaft is not subject to corporate or business tax, only its partners' respective income is taxed.

[ di ] Gr

An LLP is an approximate equivalent to the Greek EE (Eterorythmi Etaireia), which more closely resembles a Limited Partnership.

[ di ] I di

The Limited Liability Partnership Act 2008 was published in the official Gazette of India on January 9, 2009 and has been notified with effect from 31 March 2009. However, the Act, has been notified with limited sections only.[4] The rules have been notified in the official gazette on April 1, 2009. The first LLP was incorporated in the first week of April 2009. In India for all purposes of taxation, an LLP is treated like any other partnership firm. The salient features of the LLP Act, 2008 are as under:1. The LLP has an alternative corporate business vehicle that would give the benefits of limited liability but allows its members the flexibility of organizing their internal structure as a partnership based on an agreement.

[ di ] G r

[ di ]

2. The LLP Act does not restrict the benefit of LLP structure to certain classes of professionals only and would be available for use by any enterprise which fulfills the requirements of the Act. 3. While the LLP has a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP. Further, no partner would be liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partners wrongful business decisions or misconduct. 4. LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there shall not be any upper limit on number of partners in an LLP unlike an ordinary partnership firm where the maximum number of partners can not exceed 20, LLP Act makes a mandatory statement where one of the partner to the LLP should be an Indian. 5. Provisions have been made for corporate actions like mergers, amalgamations etc. 6. While enabling provisions in respect of winding up and dissolutions of LLPs have been made, detailed provisions in this regard would be provided by way of rules under the Act. 7. The Act also provides for conversion of existing partnership firm, private limited company and unlisted public company into a LLP by registering the same with the Registrar of Companies (ROC) 8. othing Contained in the Partnership Act 1932 shall effect an LLP. 9. The Registrar of Companies (Roc) shall register and control LLPs also. 10. The governance of LLPs shall be in electronic mode based on the successful model of the present Ministry of Corporate Affairs Portal. Visit LLP Portal to register a new LLP.

[ di ] J p

Limited liability partnerships ( y gen sekinin jigy kumiai?) were introduced to Japan in 2006 during a large-scale revamp of the country's laws governing business organizations. Japanese LLPs may be formed for any purpose (although the purpose must be clearly stated in the partnership agreement and cannot be general), have full limited liability and are treated as pass-through entities for tax purposes. However, each partner in an LLP must take an active role in the business, so the model is more suitable for joint ventures and small businesses than for companies in which investors plan to take passive roles.[5][6] Japanese LLPs may not be used by lawyers or accountants, as these professions are required to do business through an unlimited liability entity.[7] A Japanese LLP is not a corporation,[8] but rather exists as a contractual relationship between the partners, similarly to an American LLP. Japan also has a type of corporation with a partnership-styled internal structure, called a godo kaisha, which is closer in form to a British LLP or American limited liability company.

[ di ] K z kh

An LLP is equivalent to "

[ di ] P l

A close equivalent to limited liability partnerships under Polish law is the sp ka partnerska, introduced in 2001. This kind of company can be formed only by min. two individuals which doing the Professional services. Other activities are forbidden.

[ di ] R

An LLP is equivalent to the Romanian law vehicle known as a Societate civil profesional cu r spundere limitat .

[ di ] Si g p r

LLPs are formed under the Limited Liability Partnerships Act 2005. This legislation draws on both the S and K models of LLP, and like the latter establishes the LLP as a body corporate. However for tax purposes it is treated like a general partnership, so that the partners rather than the partnership are subject to tax (tax transparency).

[ di ] U i d Ki gd

In the nited Kingdom LLPs are governed by the Limited Liability Partnerships Act 2000 (in Great Britain) and the Limited Liability Partnerships Act (Northern Ireland) 2002 in orthern Ireland. A K limited liability partnership is a corporate body - that is to say, it has a continuing legal existence independent of its members, as compared to a Partnership which may (in England and Wales, does not) have a legal existence dependent upon its membership. A K LLP's members have a collective ("Joint") responsibility, to the extent that they may agree in an "LLP agreement", but no individual ("several") responsibility for each other's actions. As with a limited company or a corporation members in an LLP cannot, in the absence of fraud or wrongful trading, lose more than they invest. In relation to tax, however, a K LLP is similar to a partnership: it is tax transparent or passthrough, that is to say it pays no K tax but its members do in relation to the income or gains they receive through the LLP. It is a unique entity in its synthesis of collective and individual rights and responsibilities and its infinite flexibility - there is in fact no requirement for the LLP agreement even to be in writing because simple partnership-based regulations apply by way of default provisions. It has to date been closely replicated by Japan - see above - and by the financial centres of Dubai and Qatar. It is perhaps closest in nature to a limited liability company in the nited States of America although it may be distinguished from that entity by the fact that the LLC, while having a legal existence independent of its members is not technically a corporate body because its legal existence is time limited and therefore not "continuing".

" in Kazakh.

The LLP structure is commonly used by accountants, as a company may not act as auditor to another company, as well as by firms of solicitors. More information is available on the official Companies House website.
[ di ] U i d S

In the nited States, each individual state has its own law governing their formation. Limited liability partnerships emerged in the early 1990s: while only two states allowed LLPs in 1992, over forty had adopted LLP statutes by the time LLPs were added to the niform Partnership Act in 1996.[9] The limited liability partnership was formed in the aftermath of the collapse of real estate and energy prices in Texas in the 1980s. This collapse led to a large wave of bank and savings and loan failures. Because the amounts recoverable from the banks were small, efforts were made to recover assets from the lawyers and accountants that had advised the banks in the early-1980s. The reason was that partners in law and accounting firms were subject to the possibility of huge claims which would bankrupt them personally, and the first LLP laws were passed to shield innocent members of these partnerships from liability.[10] Although found in many business fields, the LLP is an especially popular form of organization among professionals, particularly lawyers, accountants, and architects. In some .S. states, namely California, ew York, Oregon, and evada, LLPs can only be formed for such professional uses.[11] Formation of an LLP typically requires filing certificates with the county and state offices. Although specific rules vary from state to state, all states have passed variations of the Revised niform Partnership Act. The liability of the partners varies from state to state. Section 306(c) of the Revised niform Partnership Act (1997)(RUPA) (a standard statute adopted by a majority of the states) grants LLPs a form of limited liability similar to that of a corporation: An obligation of a partnership incurred while the partnership is a limited liability partnership, whether arising in contract, tort, or otherwise, is solely the obligation of the partnership. A partner is not personally liable, directly or indirectly, by way of contribution or otherwise, for such an obligation solely by reason of being or so acting as a partner. However, a sizable minority of states only extend such protection against negligence claims, meaning that partners in an LLP can be personally liable for contract and intentional tort claims brought against the LLP.[12] While Tennessee and West Virginia have otherwise adopted RUPA, their respective adoptions of Section 306 depart from the uniform language, and only a partial liability shield is provided.[citation needed] As in a partnership or limited liability company (LLC), the profits of an LLP are allocated among the partners for tax purposes, avoiding the problem of "double taxation" often found in corporations. Some US states have combined the LP and LLP forms to create limited liability limited partnerships.

Limited partnership
From Wikipedia, the free encyclopedia

Companies law
Company Business

Compan forms

Sole proprietorship Partnership (General Limited Corporation Cooperative

P)

nited tates

S corporation C corporation Delaware corporation Nevada corporation Massachusetts business trust Delaware statutory trust

P Series

/ reland / Commonwealth

imited company (by shares by guarantee Public Proprietary)

Unlimited company Community interest company

European Union / EEA

SE SCE SPE EEIG

Elsewhere

AB AG A S A/S AS GmbH K.K. .V. Oy S.A. more

Doctrines

Corporate governance Limited liability Ultra vires Business judgment rule Internal affairs doctrine De facto corporation and corporation by estoppel Piercing the corporate veil Rochdale Principles

Related areas

Contract Civil procedure

vde

A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). It is a partnership in which only one partner is required to be a general partner.[1] The GPs are, in all major respects, in the same legal position as partners in a conventional firm, i.e. they have management control, share the right to use partnership property, share the

profits of the firm in predefined proportions, and have joint and several liability for the debts of the partnership. As in a general partnership, the GPs have actual authority as agents of the firm to bind all the other partners in contracts with third parties that are in the ordinary course of the partnership's business. As with a general partnership, "An act of a general partner which is not apparently for carrying on in the ordinary course the limited partnership's activities or activities of the kind carried on by the limited partnership binds the limited partnership only if the act was actually authorized by all the other partners."[2] Like shareholders in a corporation, LPs have limited liability, meaning they are only liable on debts incurred by the firm to the extent of their registered investment and have no management authority. The GPs pay the LPs a return on their investment (similar to a dividend), the nature and extent of which is usually defined in the partnership agreement. General Partners thus carry more liability, and in cases of financial misfortune, the GP becomes "the generous partner". Limited partnerships are distinct from limited liability partnerships, in which all partners have limited liability.

Contents
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1 Limited liability 2 History 3 Regional variations o 3.1 United States o 3.2 United Kingdom o 3.3 Japan o 3.4 ew Zealand 4 See also 5 References

[edit] Limited liability

When the partnership is being constituted or the composition of the firm is changing, LPs are generally required to file documents with the relevant state registration office. LPs must also explicitly disclose their LP status when dealing with other parties, so that such parties are on notice that the individual negotiating with them carries limited liability. It is customary that the notepaper, other documentation, and electronic materials issued to the public by the firm will carry a clear statement identifying the legal nature of the firm and listing the partners separately as general and limited. Hence, unlike the GPs, the LPs do not have inherent agency authority to bind the firm unless they are subsequently held out as agents and so create an agency by estoppel or acts of ratification by the firm create ostensible authority. In some jurisdictions, the limited liability of the LPs is contingent on their not participating in management.

[edit] History
The societates publicanorum which arose in Rome in the 3rd century BC may have arguably been the earliest form of limited partnership. During the heyday of the Roman Empire they were roughly equivalent to today's corporations: some had many investors, and interests were publicly tradable. However, they required at least one (and often several) partners with unlimited liability.[citation needed] The Qirad and Mudaraba institutions in Islamic law and economic jurisprudence were more similar to the modern limited partnership. These were developed in the medieval Islamic world, when Islamic economics flourished and when early trading companies, big businesses, contracts, bills of exchange and long-distance international trade were established.[3][verification
needed]

In medieval Italy, a business organization known as the commenda appeared in the 10th century that was generally used for financing maritime trade. In a commenda, the traveling trader of the ship had unlimited liability, but his investment partners on land were shielded. A commenda was not a common form for a long-term business venture as most long-term businesses were still expected to be secured against the assets of their individual proprietors.[4] As an institution, the commenda is very similar to the qirad but whether the qirad transformed into the commenda, or the two institutions evolved independently cannot be stated with certainty.[5] Colbert's Ordinance of 1673 and the apoleonic Code of 1807 reinforced the limited partnership concept in European law. In the United States, limited partnerships became widely available in the early 19th century, although a number of legal restrictions at the time made them unpopular for business ventures. Britain enacted its first limited partnership statute in 1907.[6]

[edit] Regional variations

For a list o types o corporation and other business types by country, see Types o business entity.

[ di ] U i d S

In the United States, the LP organization is most common among law firms, accounting firms, film production companies, finance firms and real estate investment projects or in types of businesses that focus on a single or limited-term project. They are also useful in "labor-capital" partnerships, where one or more financial backers prefer to contribute money or resources while the other partner performs the actual work. In such situations, liability is the driving concern behind the choice of LP status. The LP is also attractive to firms wishing to provide shares to many individuals without the additional tax liability of a corporation. Private equity companies almost exclusively use a combination of general and limited partners for their investment funds. Well-known limited partnerships include Enterprise GP Holdings, Blackstone Group, Bloomberg L.P. and C . Prior to 2001, the limited liability enjoyed by LPs was contingent upon their refraining from taking any active role in the management of the firm. However, Section 303 of the Revised

Uniform Limited Partnership Act eliminates the so-called "control rule" with respect to personal liability for entity obligations and brings limited partners into parity with LLC members, LLP partners and corporate shareholders. The 2001 amendments to the Uniform Limited Partnership Act also permitted limited partnerships to become Limited Liability Limited Partnerships. Under this form, debts of a limited liability limited partnership are solely the responsibility of the partnership, thereby removing general-partner liability for partnership obligations. This was in response to the common practice of naming a limited-liability entity as a 1% general partner that controlled the limited partnership and organizing the managers as limited partners. This practice granted a limited partnership de facto limited liability under the partnership structure.[7]

[ di ] U i d Ki gd

In the United Kingdom limited partnerships are governed by the Limited Partnerships Act 1907. However, English law and Scottish law are distinct on partnerships. In English law, limited partnerships are not legally separate entities: the partners are jointly and severally liable and any law suits filed are filed against the partners by name. There has been discussion over whether limited partnerships operating under English law should be made separate legal entities in the same way as limited liability partnerships are. The Law Commission report on partnership law LC283 suggests that creation of separate legal personality should be left as an option for the partners to decide upon when a partnership is formed. There are concerns that automatically making partnerships separate legal entities would restrict their ability to trade in some European countries and also expose them to different tax regimes than expected.

[ di ] J p

Japanese law has historically provided for two business forms similar to limited partnerships:
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Goshi gaisha, a form of close corporation (mochibun kaisha) with unlimited liability for certain shareholders Tokumei kumiai (lit. "anonymous partnerships"), a form of partnership in which nonoperating partners have limited liability so long as they remain anonymous

In 1999, the Diet of Japan passed legislation enabling the formation of "limited partnerships for investment" ( t shi jigy y gen sekinin kumiai?). These are very similar to Anglo-American limited partnerships, in that they adopt most provisions of [[ for limited liability for certain partners. Profits of an investment LP pass through to all partners proportional to their investment share. For tax purposes, profits and losses will only pass through to the general partner(s) while the partnership has negative equity (i.e. liabilities exceeding assets); however, profits and losses while the partnership has positive equity are shared equally.
[ di ] N w Z l

In ew Zealand, Limited Partnerships are a form of partnership involving General Partners, (who are liable for all the debts and liabilities of the partnership) and Limited Partners (who are liable to the extent of their capital contribution to the partnership). The Limited

Partnerships Act replaces Special Partnerships that exist under Part 2 of the Partnership Act 1908. Special partnerships are considered obsolete as they do not provide the appropriate structure preferred by foreign venture capital investors. Features of Limited Partnerships include:
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a list of activities that the limited partners can be involved in while not participating in the management of the Limited Partnership (safe harbour activities) an indefinite lifespan if desired separate legal personality tax treatment for Limited Partnerships.

The registers of Limited Partnerships and Overseas Limited Partnerships are administered by the ew Zealand Companies Office. Registration, maintenance and annual return filing for Limited Partnerships and Overseas Limited Partnerships are conducted through manual forms. More information on ew Zealand Limited Partnerships administration can be found on the Limited Partnerships homepage.

Not-for-profit corporation
From Wikipedia, the free encyclopedia It has been suggested that this article or section be merged into Non-profit organization. (Discuss) Proposed since July 2008. A not-for-profit corporation is an incorporated organization created by statute, government or judicial authority and registered at the Registry of Commerce, that is not intended to provide a profit to the owners or members. It differs from a for-profit corporation substantially as this is organized to provide profits to its owners or members. A non -profit corporation is always organized as a non-stock corporation.

Contents
[hide]
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1 Non-profit organizations 2 Purpose 3 Legal 4 Examples 5 Funding 6 See also 7 External links

[edit] Non-profit organizations

The term not-for-profit corporation may include non-profit organizations, if these organizations are incorporated and registered at a Registry of Commerce (often asSocieties, Associations, Trusts, etc.). However, non-profit organizations created through charter or statutes that are not required to register as corporations, are not included in this classification. Regarding the more general group of organizations created for non -profit purposes see: Nonprofit organization.

[edit] Purpose
A not-for-profit corporation is usually created with a specific purpose, such as for educational, charitable or related to other enumerated purposes, it may be a foundation, a charity or other type of non-profit organization.

[edit] Legal
Such a corporation is subject to the general laws of corporations as adapted. In some cases it may also be a public corporation. In many countries these entities are subject to exemption from various tax laws, in certain circumstances. Regarding US tax law applying to these organizations see: intermediate sanctions, unrelated business activities.

[edit] Examples
Examples of not-for-profit organizations that have been formed in the past include the Electricity Supply Commission of South Africa (Eskom) and the ew Zealand Electricity Department ( ZED). Both of these organizations were set up to develop the electricity generation and electric power transmission needs of the respective countries by statute (The Electricity Act in each country).

[edit] Funding
One of the problems experienced by such corporations is their inability to fund growth from profits in the way that conventional businesses can. In the case of Eskom, the dilemma was solved by establishing a capital development fund, contributions to which were deemed to be costs and the investment of the fund was restricted to the loan stock (bonds) of Eskom. In ew Zealand, the pricing of electricity was regulated to allow for the collection of a capital contribution. Ultimately the respective governments amended the legislation to bring the organizations into the normal commercial fold.

Partnership
From Wikipedia, the free encyclopedia A partnership is an arrangement where parties agree to cooperate to advance their mutual interests.[1] Since humans are social beings, partnerships between individuals, businesses, interest-based organizations, schools, governments, and varied combinations thereof, have always been and remain commonplace. In the most frequent instance, a partnership is formed between one or more businesses in which partners (owners) co-labor to achieve and share profits and losses (see business partners). Partnerships are also common regardless of and among sectors. onprofit, religious, and political organizations, may partner together to increase the likelihood of each achieving their mission and to amplify their reach. In what is usually called an alliance, governments may partner to achieve their national interests, sometimes against partnered governments who hold contrary interests, such as occurred during World War II and the Cold War. In education, accrediting agencies increasingly evaluate schools by the level and quality of their partnerships with other schools and a variety of other entities across societal sectors. Partnerships also occur at personal levels, such as when two or more individuals agree to domicile together, while others are not only personal but private, known only to the involved parties. Partnerships present the involved parties with special challenges that must be navigated unto agreement. Overarching goals, levels of give-and-take, areas of responsibility, lines of authority and succession, how success is evaluated and distributed, and often a variety of other factors must all be negotiated. Once agreement is reached, the partnership is typically enforceable by civil law, especially if well documented. Partners who wish to make their agreement particularly explicit and enforceable typically draw up Articles of Partnership. While partnerships stand to amplify mutual interests and success, some are considered ethically problematic. When a politician, for example, partners with a corporation to advance the corporation's interest in exchange for some benefit, a conflict of interest results. Outcomes for the public good may suffer. Partnerships may enjoy special benefits in tax policies. Among developed countries, for example, business partnerships are often favored over corporations in taxation policy, since dividend taxes only occur on profits before they are distributed to the partners. However, depending on the partnership structure and the jurisdiction in which it operates, owners of a partnership may be exposed to greater personal liability than they would as shareholders of a corporation. In such countries, partnerships are often strongly regulated via anti-trust laws, so as to inhibit monopolistic practices and foster free market competition. A partnership is a nominate contract between individuals who, in a spirit of cooperation, agree to carry on an enterprise; contribute to it by combining property, knowledge or activities; and share its profit. Partners may have a partnership agreement, or declaration of partnership and in some jurisdictions such agreements may be registered and available for public inspection. In many countries, a partnership is also considered to be a legal entity, although different legal systems reach different conclusions on this point.

[edit] Germany
Main article: Kommanditgesellschaft Partnerships may be formed in forms of the General Partnership (Offene Handelsgesellschaft, OHG) or Limited Partnership (Kommanditgesellschaft, KG). A partnership can be formed by only one person. In the OHG, all partners are fully liable for the partnership's debts, whereas in the KG there are general partners with unlimited liability and limited partners whose liability is restricted to their fixed contributions to the partnership. Although a partnership itself is not a legal entity, it may acquire rights and incur liabilities, acquire title to real estate and sue or be sued

[edit] China
Main article: Partnership (China) In mainland China, a partnership enterprise encompasses two types of partnerships general partnerships and limited partnerships.[2] A general partnership comprises general partners who bear joint and several liabilities for the debts of the partnership enterprise.[2] There is a special general partnership which can be employed by professional service providers such as accountant firms and law firms. A limited partnership enterprise includes general partners and limited partners where the limited partners are liable only to the extent of their capital contributions.[2]

[edit] Japan
The Japanese civil code provides for partnerships by contract, which are commonly known as ? nin'i kumiai ( ) or "voluntary partnerships." A more recent statute has allowed for the creation of limited liability partnerships. One form of partnership unique to Japan is the tokumei kumiai or "anonymous partnership," in which partners have limited liability so long as they remain anonymous in their capacity as partners and do not participate in the operation of the partnership. Japan provides for partnership-like corporations called mochibun kaisha.

[edit] Common law

Under common law legal systems, the basic form of partnership is a general partnership, in which all partners manage the business and are personally liable for its debts. Two other forms which have developed in most countries are the limited partnership (LP), in which certain limited partners relinquish their ability to manage the business in exchange for limited liability for the partnership's debts, and the limited liability partnership (LLP), in which all partners have some degree of limited liability. There are two types of partners. General partners have an obligation of strict liability to third parties injured by the Partnership. General partners may have joint liability or joint and several liability depending upon circumstances. The liability of limited partners is limited to their investment in the partnership.

A silent partner is one who still shares in the profits and losses of the business, but who is uninvolved in its management, and/or whose association with the business is not publicly known; these partners usually provide capital.

[edit] Hong Kong

Main article: Partnership (Hong Kong) A partnership in Hong Kong is a business entity formed by the Hong Kong Partnerships Ordinance, which defines a partnership as "the relation between persons carrying on a business in common with a view of profit" and is not a joint stock company or an incorporated company.[3] If the business entity registers with the Registrar of Companies it takes the form of a limited partnership defined in the Limited Partnerships Ordinance.[4] However, if this business entity fails to register with the Registrar of Companies, then it becomes a general partnership as a default.[4]

[edit] Australia
Main article: Partnership (Australia) Summarising s. 5 of the Partnership Act 1958 (Vic) (hereinafter the "Act"), for a partnership in Australia to exist, four main criteria must be satisfied. They are:
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Valid Agreement between the parties; To carry on a business this is defined in s. 3 as "any trade, occupation or profession"; In Common meaning there must be some mutuality of rights, interests and obligations; View to Profit thus charitable organizations cannot be partnerships (charities are typically incorporated associations under Associations Incorporations Act 1981 (Vic))

Partners share profits and losses. A partnership is basically a settlement between two or more groups or firms in which profit and loss are equally divided

[edit] United Kingdom limited partnership

Main articles: UK partnership law and Limited Partnership Act 1907 A limited partnership in the United Kingdom consists of:
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One or more people called general partners, who are liable for all debts and obligations of the firm; and One or more people called limited partners, who contribute a sum/sums of money as capital, or property valued at a stated amount. Limited partners are not liable for the debts and obligations of the firm beyond the amount contributed.

Limited partners may not:

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Draw out or receive back any part of their contributions to the partnership during its lifetime; or Take part in the management of the business or have power to bind the firm.

If they do, they become liable for all the debts and obligations of the firm up to the amount drawn out or received back or incurred while taking part in the management, as the case may be.

[edit] India and Pakistan

According to section 4 of the Partnership Act of 1932, which applies in both India and Pakistan, "Partnership is defined as the relation between two or more persons who have agreed to share the profits and losses according to their ratio of business run by all or any one of them acting for all". This definition superseded the previous definition given in section 239 of Indian Contract Act 1872 as Partnership is the relation which subsists between persons who have agreed to combine their property, labour, skill in some business, and to share the profits thereof between them. The 1932 definition added the concept of mutual agency. A partnership firm is not a legal entity apart from the partners constituting it. It has limited identity for the purpose of tax law as per section 4 of the Partnership Act of 1932.[5]

[edit] USA
Main article: Partnership taxation in the United States The federal government of the United States does not have specific statutory law governing the establishment of partnerships. Instead, each of the fifty states as well as the District of Columbia has its own statutes and common law that govern partnerships. These states largely follow general common law principles of partnerships whether a general partnership, a limited partnership or a limited liability partnership. In the absence of applicable federal law, the ational Conference of Commissioners on Uniform State Laws has issued non-binding models laws (called uniform act) in which to encourage the adoption of uniformity of partnership law into the states by their respective legislatures. This includes the Uniform Partnership Act and the Uniform Limited Partnership Act. Although the federal government does not have specific statutory law for establishing partnerships, it has an extensive and hyperdetailed statutory scheme for the taxation of partnerships in the Internal Revenue Code. The IRC is Title 26 of the United States Code wherein Subchapter K of Chapter 1 creates tax consequences of such great scale and scope that it effectively serves as a federal statutory scheme for governing partnerships.

[edit] Islamic Law

Main article: Qirad The Qirad and Mudarabas institutions in Islamic law and economic jurisprudence were the precursors to the modern limited partnership. These were developed in the medieval Islamic world, when Islamic economics flourished and when early trading companies, big businesses, contracts, bills of exchange and long-distance international trade were established.[6]

In medieval Italy, a business organization known as the commenda appeared in the 10th century. As an institution, the commenda is very identical to the qirad but whether the qirad transformed into the commenda, or the two institutions evolved independently cannot be stated with certainty.[7]

Sole proprietorship
From Wikipedia, the free encyclopedia A sole proprietorship, also known as a sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's. This means that the owner has no less liability than if they were acting as an individual instead of as a business. It is a "sole" proprietorship in contrast with partnerships. A sole proprietor may use a trade name or business name other than his or her legal name. In many jurisdictions there are rules to enable the true owner of a business name to be ascertained. In the United States there is generally a requirement to file a doing business as statement with the local authorities.[1] In the United Kingdom the proprietor's name must be displayed on business stationery, in business emails and at business premises, and there are other requirements.[2]

Contents
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1 Advantages 2 Disadvantages 3 Lending 4 References

[edit] Advantages
There are many advantages of corporations that are described in that article; chiefly they are the ability to raise capital either publicly or privately, to limit the personal liability of the officers and managers, and to limit risk to investors. The disadvantages of corporations are advantages to proprietorship: reduced cost of a business, as corporations must do many things like purchasing, accounting, and legal actions in more expensive ways and are subject to special taxes and fees; easier and cheaper to start and discontinue without required fees and legal expenses; and easier management, particularly when a sole owner wishes to have exclusive control, as most corporations are required to be controlled by a board of directors of several persons.

[edit] Disadvantages
Raising capital for a proprietorship is more difficult because an unrelated investor has less peace of mind concerning the use and security of his or her investment and the investment is more difficult to formalize;[3] other types of business entities have more documentation. As a business becomes successful, the risks accompanying the business tend to grow.[citation needed] One of the main disadvantages of sole proprietors is unlimited liability where the owner's personal assets can be taken away. This is particularly true for wrongdoing or liabilities created by employees; a corporation only partially shields an owner or officer for his own actions according to the principle of piercing the corporate veil. Sole proprietors often do not operate for significant periods and lack continuity[citation needed]. Also, being alone in business, sole proprietors generally lack money which leads to failure[citation needed ]. The small size of the business limits the breadth of management skills because there are fewer people working together. As employees generally seek stable employers, small independent businesses that have a high chance of failing have more difficulty attracting skilled people. Certain business structures such as Limited Liability Company allow shielding of personal assets, and sometimes, favorable tax treatment, but there are disadvantages[4] and limitations [5] also.

[edit] Lending
Holding everything else constant, small corporations are less creditworthy than small noncorporate firms, because the former have only the corporations assets to back up business debt whilst the latter have both the firms assets and the owners personal assets. Lenders also know, however, that owners of small corporations can easily shift assets between their personal accounts and their corporations accounts, so they may not view the corporate/noncorporate distinction as meaningful for small firms. In making loans to small corporations, lenders therefore may require that owners personally guarantee the loans. This abolishes the legal distinction between corporations and their owners for purposes of a particular loan, and puts the owners personal assets at risk to repay the loan.[6]