Statutory conversions are simpler and cheaper than statutory mergers However

Statutory conversions are simpler and cheaper than

This preview shows page 7 - 9 out of 13 pages.

corporation. Statutory conversions are simpler and cheaper than statutory mergers. However, this option may not be available in your state. - Statutory merger: Through a merger, a new corporation is formed and then absorbs the LLC. This requires filing a certificate of merger with the Secretary of State. The merger then converts the LLC members' interests to stock in the new corporation. - Non-statutory conversion: This option removes all of the LLC members' interests, assets, and liabilities and formally assigns them to the new corporation. This requires that the members all formally agree to the proposed structure. This option is also complex and typically requires help from a small business lawyer. Source:
Image of page 7
B. Critical Thinking – Decision Making Across Organization Kobe Bryant and Lebron James Kobe Bryant and Lebron James, two professionals in the finance area, have worked for San Miguel Leasing for a number of years. San Miguel Leasing is a company that leases high-tech medical equipment to hospitals. Kobe and Lebron have decided that, with their financial expertise, they might start their own company to provide consulting services to individuals interested in leasing equipment. One form of organization they are considering is a Partnership, (organization). If they start a partnership, each individual plans to contribute P500,000 in cash. In addition, Kobe has used IBM computer that originally cost P30,700 which he intends to invest in the partnership. The computer has a present market value of P15,000. Although both Kobe and Lebron are financial wizards, they do not know how a partnership operates. As a result they have come to you for advice. 1. What are the major disadvantages of starting a partnership? - The liability of the partners for the debts of the business is unlimited - Each partner is ‘jointly and severally’ liable for the partnership’s debts; that is, each partner is liable for their share of the partnership debts as well as being liable for all the debts - There is a risk of disagreements and friction among partners and management - Each partner is an agent of the partnership and is liable for actions by other partners - If partners join or leave, you will probably have to value all the partnership assets and this can be costly. 2. What type of document is needed for a partnership, and what should this document contain? Basic Requirements 1. Name Verification Slip – form to verify that the name you’re registering is unique and has not been used 2. Articles of Partnership (AP); a contract that forms an agreement among business partners to pool labor and capital and share in profit, loss, and liability. Such a document acts as a rule book for limited partnerships by outlining all the conditions under which parties enter into a partnership.
Image of page 8
Image of page 9

You've reached the end of your free preview.

Want to read all 13 pages?

  • Fall '19
  • Corporation, Limited partnership, Types of business entity, partner

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture