Engler Sp02 Corporations KOHN

Engler Sp02 Corporations KOHN - Engler/Spring 2002...

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Engler/Spring 2002 Brian Kohn 1 CORPORATIONS OUTLINE TYPES OF ORGANIZATIONS PARTNERSHIPS GENERALLY Partnerships can come into effect w/o filing documents, as long as biz carried out as partnership. Two types of partnerships exist: General and limited . General partnerships : Association of two or more people who carry out biz as co-owners. All partners individually liable for obligations of partnership. All partners have equal say in management. Dissolved automatically when general partner dies or withdraws, unless partnership agreement specifies otherwise. Each partner pays tax on his earnings from the partnership. While economic interest is transferable, one partner cannot sell his partnership to anyone else. New partners must be approved by partnership. Limited partnerships : Made up of tow types of partners – general and limited. General partners liable for debt – but not limited partners. Limited partners can’t participate in management – if they do, run risk of being held as general Death/withdrawal of limited partner does not cause dissolution. Each partner pays tax on his earnings from partnership. While economic interest is transferable, one partner cannot sell his partnership to anyone else. New partners must be approved by partnership. CORPORATIONS GENERALLY Made up of any number of people owning shares in corp. Two kinds: (1) Public; and (2) Private or closely held Each shareholder’s liability limited to amount they have invested in the stock. Corps. generally have centralized management. Shareholders elect board, which elects officers. Officers run the company – this is different in closely held corps. Two types of shareholder voting: (1) Direct, where each shareholder can vote all his shares for each director position. This allows majority to elect whole board; or (2) Cumulative, where shareholder’s total number of shares multiplied by number of directors being elected & then this is total number of votes shareholder has. He can split b/w directors any which way – prevents majority from electing all directors. Corps. have continued existence – not matter who has ownership. Ownership interest is freely transferable. To form a corp., must follow state rules & make relevant filings in accordance w/those rules. Law of state where corp. incorporates governs (Internal Affairs Doctrine). Corps. subject to double tax (although somewhat offset by salaries, which can be deducted). Limited Liability Companies (LLC) Recent development – not subject to double taxation (no corp. tax). Holders get membership interests – not shares. Makes it harder to get investors. Members share in management like w/partnerships.
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This note was uploaded on 02/14/2008 for the course LAW 7060 taught by Professor Haas during the Spring '07 term at Yeshiva.

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Engler Sp02 Corporations KOHN - Engler/Spring 2002...

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