Beruflich Dokumente
Kultur Dokumente
-Corporations
-LLPs
-LLCs
-LPs
-Pships
-Business Trusts
Corporation: Legal Device for carrying on a business enterprise for profit, a legal unity with a stuatus or capacity of its own separate from the
shareholders or members who own it.
Public Corp.
Private Corporations CHC - Closely Held Corps
Ownership consists of widely separate stock
Corps which do not meet Ownership has (1) few owners and stock (2) is not traded
holdings.
the critera of a CHC, and ona antional exchangre or over the counter, and (3)
are not traded-over the significant overlap b/w MGMT and SH.
SUBJECT TO INCREASED SEC RULES
counter anyhere.
(probably)
(just beware this is SUBJECT TO INCREASED FIDUCIARY DUTIES; but
i. Traded OTC (NASDAQ)
spectrum) more flexibility in practical matters
ii. Nat'l Exchanges
Major Disadv.
Corps are "double-taxed" -> both as income to corp and
as payment to sharehodlers. Big reason to be pship
instead
Control & Profit Ordinary Course of Business Rule Binding Statemens LIaiblities
In absence of Sharing
another agreement UPA 9(1) UPA 11 -> Pship is Insepction UPA: Jointly & severally liable.
bound to Rights
UPA 18 (default):
-> Unanimous Unless otherwise Each partner is an agent, therefore can admissions by the RUPA: Joint & several liability.
consent to the bind other party in the ordinary course parties. UPA 19:
agreed, all partners
admission of anew of business. Partners have
share equally in the ENTITY RESPONSIBLITY.
partner Charged Knowledge the right to
control of the If the jurisdiction is entity; and
Extraordinary act? -> Not OCB. ExtraAct inspec
partnership AND in no partner is named only the
-> All partners have must be authorized by other partners. UPA 12 charges partnership
the profits/lossess pship named, then NO binding
equal reights in pship with records.
(regardless of capital judgment against partners, only
management. contribution) Hiring employee not w/n the ordinary knowledge of other
the pship property.
course of business. Summers v. Dooley. partners
Ordinary course of business? Who wins Outside Ordinary CoB? Dissenter wins.
Wanter wins. in Not able to bind. HOWEVER, the wanter may generally do it, but the wanter will be liable for all
Able to bind corp & other partner. deadlock? costs and results.
NOTE: " Typically, a partner cannot dissolve a partnership for his Consequences for Departing Partner
own benefit UNLESS he fully compensates the partner. 1) Terminates right to manage; 2) ends duty to not compete; 3)
1) Buyout of
fiduciary duties remain for things b4 disassociation; and 4)
Freeze-Out Rule. the departing
Does not discharge liability for pre-dissasoci. But no new
partner
liabilities. (russian roullete deal possible here)
partner
liabilities. (russian roullete deal possible here)
Limited Partnership
Rulpa and Re-Rulpa
General Partners Limited Partners
LP Basics
Control: Complete control; responsible Control: Do not partake in day-to-day
Benefits over other for managment of the enterprise on business. Generally, need to become
Permits the profit-sharting for LL Alts day-to-day basis. general partner to make these
passive investors. Liaiblity for [Good for GP to decisons. SPLIT.
passive investors limited to attract capital and Fiduciary Duties: Owed to the limited RULPA: Some control allowed.
investment in business; taxation keep own discretion] partners as if in a partnership. Re-RULPA: Control will not make GP
benefits of a partnership. UNLESS it misleads 3rd party to think
-> Guarantees **May be limited by contract. ** person is gp for liability
Classes of Partners centralized At some
(1) General managment, effective Agency Status: Full agent, may point, CL: Courts focus on WHETHER A 3d
(2) Limited. way of limiting the completely bind within the ordinary we'lls ay an pty was misled to believe that a LP
influence of the course of business. LP is a was a GP (may get liability here)
Taxation financier GP; if
Fiduciary Duties: Generally do not
Taxed like a PARTNERSHIP. -> Subordination: Subordinated in debt INVOLVED.
have very strong fiduciary duties; weak.
Huge benefit. Problems to creditors.
But still present.
Still illiquid.
Liaibilty: FULL LIABILITY.
Sliding scale: The more involvement,
Corporation-swap-trick: Remember, the more fiduciary duties will be inferred
Illiquidiity Solutions you can usually make a corporation the & applied.
(subj 2 fed sec law) general partner in order to avoid Agency Status: NOT agents and
liability. cannot bind the LP
" Master" Limited Partnerships
Subordination: Subordinated in debt
Publicly owned LP intended to make the Safe Harbor for LP involvement: RULPA to creditors.
interests LIQUID. -> MLP is sollution to illiquidity 303(b)
issue. Liaibilities: Only to the extent of the
An LP will not be a GP if: investment.
No limited partners, instead, people hold - He is contractr for agent of the LP/ GP.
"units" of the LP. Act as assignees of a -Consulting with the GP Safe Harbor Also Protects Voter on
depository with the LP status. - Approving or disapproving amendment to some Organic Matters.
Roll-Up Transaction: pship No liability as GP if:
Combines several illiquid LPs into one tradable -Acting in suerty -Voting on dissolution; transfer of
MLP (or corp). Can utilize the MLP or simply "go -OTHERS: Court must examine to substantially all assets; incurrence of
public" determine if liability should attach b/c debt beyond ordinary course of
activity equates to participation in business; change in nature of lp
-> Investotrs recieve equity in exchange for lost general managment removal of GP.
LP interests.
-> Advantages. Fix to illiqudity
- Diversfication Formation.
-> Compliance with RULPA or Re-RULPA- Filing of certificate with sec of state; essentially
- Consolidation of mGmt/ economies of scale.
articels of incpro. NO DEFAULT to this. Failure = partnership & full liability
LIimited Liability
Partnerships
Basics.
-> Essentially identical to the LLC; but NO No automatic vicarious liability Advantages Disadvantages
statutorily mandated structure. Wyoming.
-Liable for own wrongful/negligent acts -Ability to rely on -Stuck with pship
BENEFITS pship caselaw caselaw (can't try
-> ease of creation (check box) -Liable for wrongful/negligent acts by novel args)
-> ability to partially rely on developed pship third party under P's control. -Pship taxation
law; less uncertainty. -Lenders (as a
Fiduciary Duties? -Ease of practical point) will
creation avoid the LL by
Yes. But only to one another. requiring personal
Formation. -Some allow gaurantees.
one-owner
RUPA 1001 -> Check the box partnership on
state tax form. So long as the pship conforms to
state LLP regulations, it enjoys LL.
Limited Liability
Companies
Business Trust.