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Advantages of limited partnership
Advantages and disadvantages of a partnership
Limited Partnership Advantages
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A limited partnership is a form of business that ensures that an investor has limited personal liability, and further enhances the ability to raise capital for the growth of the business. As compared to sole proprietorship that has the business owner bearing the entire liability, a limited partnership provides that the partner only bears a portion of the liability. This form of business offers personal asset protection, basically implying that a partner cannot have his/her assets being used to settle the business liabilities and debts, further contrasting a general partnership in which the partners are not considered as separate entities from the business, and their personal assets can be used in the settlement of debts and liabilities.
Although public companies ascertain that the shareholder is limited to liability to the contribution they have in the company in terms of shares, mobilizing funds provides a challenge, since the company needs to have satisfied certain legal and financial requirements before being listed in a stock exchange where funds can be gathered and other opera...
Partnership – “A legal entity formed by two or more co-owners to operate a business for profit.” (Longenecker, Petty, Palich, Hoy, Pg. 202) In a partnership, the advantage for the owners is the capability to reduce the workload and the financial burden, especially if each partner has management skills that enhances the business. The disadvantages of a partnership such as personal conflicts and leadership expectations, therefore this organizational form should only be chosen once all other options have been considered.
Liability – The general partners are all responsible for the debts and obligations of the business, but the limited partners are only liable up to their invested amount.
A rights issue is an issue of rights to purchase new shares, which are issued pro rata to the existing shareholders, Armitage (2007). Rights issues were the dominate form of seasoned equity offers for fund raising in the United Sates and the United Kingdom . However, there has been a swing to other forms of share issues. The US has shifted towards firm commitments, Eckbo and Masulis (1992). In this the underwriter guarantees the sale of the issued stock at the agreed-upon price. The shift in the US occurred in the 1960’s. In the UK there has been a move towards open offers. Open offers are similar to rights issues but investors are unable to sell the stocks that they purchase under the open offer to other parties. The change in the UK occurred much later than the US, with the shift occurring in the 1990’s.
According to Corporation Act 2001 s124(1), it illustrates that ‘’A company has the legal capacity and powers of an individual both in and outside the jurisdiction” . As it were, company as a legal individual must be freely with all its capital contribution shall embrace liability for its legal actions and obligations of the company’s shareholders is limited to its investment to the company. This ‘separate legal entity’ principle was established in the case of Salomon v Salomon & Co Ltd [1987] as company was held to have conducted the business as a legal person and separate from its members. It demonstrated that the debt of company is belonged to the company but not to the shareholders. Shareholders have only right to participate in managing but not in sharing the company property. Besides ,the Macaura v Northern Assurance Co Ltd [1925] demonstrates that the distinction between the shareholders and company assets. It means that even Mr Macaura owned almost all the shares in the company, he had no insurable interest in the company’s asset. The other recent case is the Lee v Lee’s Air Farming Ltd [1961] which illustrates that the distinct legal entities between employee ad director allows Mr.Lee function in dual capacities. It resulted that the corporation can contract with the controlling member of the corporation.
This report gives the brief overview of the concept of corporate governance, its evolution and its significance in the corporate sector. The report highlights various key issues and concerns that are faced by the organizations while effectively implementing and promoting Corporate Governance.
Nottingham Trent University. (2013). Lecture 1 - An Introduction to Corporate Governance. Available: https://now.ntu.ac.uk/d2l/le/content/248250/viewContent/1053845/View. Last accessed 16th Dec 2013.
For this interview, I questioned one of my father’s close friends and co-workers, Gary Cole, who is employed at Deloitte LLP. He is a principal within the Human Capital sector of the consulting branch. Although I interviewed my father last time with a similar position, I want to learn more about the consulting industry since I have an offer in that field after graduation. I feel it’s important to do my due diligence on the profession now to see if it best suits me. Deloitte is a Professional Services, Limited Liability Partnership (LLP).
Salomon v Salomon & Co Ltd illustrates a typical case in company law. The opinion that a company has an independent personality has since been established. It was clearly pointed out the company needs to be responsible for all its acts and the assets of the company are separated from the members ' personal financial affairs. While the Companies Law of 1862 was updated, there is room for improvement in terms of the somewhat ill-defined requirements concerning members ' and shareholders ' interests and liabilities. This situation has led the Government to revise the law relating to companies
Another example of business ownership is a partnership. Examples of partnerships used in business are accounting firms and solicitors firms. A partnership has two or more owners. They work, manage and are responsible for the running of the business. Individual partners may concentrate on a certain aspect of the business where they have expert knowledge. As there is more than one owner, larger amounts of capital can be fed into the business via personal funding or bank loans. Partnerships have an unlimited liability.
Salomon & Co Ltd[ Salomon v. Salomon [1897] AC 22] stablished the principle: In accordance with the law, a limited company is established. Then the company obtains an independent personality according to law, even if the company is controlled by only one or a few shareholders and the remaining shareholders have only symbolic benefits to the company.[ Brenda Hannigan, Company Law (1st edn, Oxford University Press).] It do not affect the independent corporate juridical. The judgment of Salomon v. Salomon & Co Ltd is also regarded as a troublesome unfortunate decision, it provides an opportunity for individual shareholders or minority shareholders to seek extrajudicial benefits and is unfair to the company 's creditors. In order to overcome this drawback, rectify some person abuse the corporate personality, court founded the "piercing the corporate veil" principle. In accordance with this rule, if the company 's capital is not sufficient to compensate the creditors or their claimants under certain conditions, the court may award that the individual shareholders of the company shall be liable for compensation. This essay will discuss the exceptions to the principle and the future of piercing the veil of
3.Longevity: the sole proprietorship has a limited lifespan once the owner dies or moves on from the sole proprietorship will cease to exist
Using equity as a source of finance would mean that Barra Airways would be increasing the level of shareholder accountability it currently has. In the future, Barra Airways may find that in the future its freedom to make conduct business freely is hindered, if it issues more equity. The legal action taken by shareholders against companies has risen substantially since 1996 [7]. If this trend continues into the future then the likelihood of Barra Airways experiencing shareholder activism is significant.
This paper will discuss the role of the financial manager and how that particular role, in the area of corporate expertise, differs from that of the shareholder and of the employee. The discussion the paper provides will help determine how the financial manager maximizes shareholder value in today's financial market. Lastly, the viewpoint of the financial manager will be compared to that of the shareholder and employee.
Before a partnership formation is imminent, the business needs to decide on which type of partnership to form. There are three types of partnerships: (1) general partnerships, (2) limited partnerships, and (3) joint ventures. All three partnerships contain two or more owners, but all partners assume equal division of ownership, liabilities, and profits in a general partnership. Limited partnerships offer limited liability protection based on each partner’s contribution percentage. Joint ventures are classified as general partnerships with limited existence periods. Once a type of partnership has been determined, the business fulfills a series of requirements before the partnership can be successfully formed. The first step is to register
There has been a drive towards corporate governance which has been driven by a greater need for shareholder protection. If investors feel well cushioned then there is a higher chance that t...