Legal Studies Chapter 18 and 19
Legal Studies Chapter 18 and 19 LGS 200
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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