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Legal Studies Chapter 18 and 19

by: Paget Kern

Legal Studies Chapter 18 and 19 LGS 200

Marketplace > University of Alabama - Tuscaloosa > Business > LGS 200 > Legal Studies Chapter 18 and 19
Paget Kern

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Partnerships liability and Corporations
Legal Studies Honors/ Legal Environment of Business
Mr. Brian Turner
Class Notes
LGS 200, Legal Studies honors
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This 3 page Class Notes was uploaded by Paget Kern on Saturday March 26, 2016. The Class Notes belongs to LGS 200 at University of Alabama - Tuscaloosa taught by Mr. Brian Turner in Winter 2016. Since its upload, it has received 10 views. For similar materials see Legal Studies Honors/ Legal Environment of Business in Business at University of Alabama - Tuscaloosa.

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Date Created: 03/26/16
Legal Studies Chapter 18 3/23/16  Limited liability partnerships o Each partners have “pass through” tax advantage o Only for professionals o Formation of an LLP  Amendment to partnership contracts o Liability in an LLP  Partners are not liable for their other partner’s professional negligence  If the partner was supposed to be supervising the other partner, the partnership is defendant #1, the partner with the malpractice is defendant #2, and the supervisor is defendant #3  If partner was on law firm business and causes injury to the plaintiff, then law firm is defendant #1, the partner is defendant #2, but plaintiff can also sue all the partners  Partner indemnity is reimbursement from negligence partner o Family LLP  Not professionals, related  Agriculture  Limited Partnerships o One or more limited partner and one or more general partner o Limited partner “silent partner” is the money maker/ investor o General partner is responsible for day to day operations o Formation  Articles formation/partnership  Partnership agreement o Liabilities of partners  Care and honesty, lawful  General partner is manager owes duty of care, unlimited personal liability  Limited partner invests money, limited liability  If creditor dues partnership, defendant #1 is the general partner for personal assets, defendant #2 is limited partner in debt  Limited partner has no management rights, unless he begins acting as so, court can remove the limited liability protection o Rights and duties  Limited and general partners have same rights to see books and be informed about business  Fiduciary duty o Dissociation and Dissolution  Limited partner entitled to return of capital contributions, receives all theirs before general partner  Partnership interest is considered a security  Dissolved if retirement, withdrawal, death, bankruptcy… need one general and one limited partner to continue partnership  LLLP’s o General Partner has limited liability, but not in charge of investments o Might as well be an LLC, not allowed in most states Chapter 19 Corporations  Nature and Classification of Corporations o Artificial person, owners are shareholders (people, LLC, partnerships) o Same rights as natural person  Access to court systems  Constitutional guarantees o Corporate Personnel  Management responsibility with the board of directors  Policy makers  Appointing and removing officers of corporation  Shareholders are owners of corporations, elect the board of directors  Officers make day to day decisions of corporation o Limited Liability of Shareholders  Limited liability protection  Shareholders’ personal assets are not at risk  Limited to what they have invested into the corporation (becomes corporation’s asset) o Corporate Earnings and Taxations  Profits can be retained or reinvested  Can be taxed twice, first corporation, then shareholders by dividends o Torts  Subchapter s corporation: less than 75 shareholders, no corporate entity… pass through taxation, not taxed on corporate level, only taxed on income to shareholders  Corporation responsible for a third party injured by employee working on behalf of corporation o Criminal acts  Corporation liable for criminal acts, but only fined or cancelled permits, not imprisoned  Responsible officer doctrine: if prosecutor can prove that a member or officer was involved with criminal activity, they will go to jail o Classification of Corporations  Domestic: business within state of incorporation  Foreign: formed in one state, business done in another  Alien: former in another country  Public and private: publicly traded on stock exchange, municipal, or not traded and smaller  Nonprofit: no profit, benefit society, charitable  Close: few shareholders, not LLC, typically related or close relationship. Informal management  Restrict transfer of shares… provision that says give right for other owners to buy your share  Shareholders can enter a stock agreement, who you want and can sell stocks to  Misappropriation of corporate asses, cannot use equipment for personal gain  S Corporations  Avoids double taxation  IRS requirement: domestic, less than 75 shareholders non being alien  Benefit Corporations  Money making corporation that seeks to benefit society  Ex. Patagonia, etsy


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