Ownership and Control of Business
There are 3 main business structures used in the USA:
- Sole Traders
A sole trader owns all the assets of the business and is solely responsible for the business’ obligations and debts.
If you want to operate a business together with others you can set up as a partnership, which is similar to a sole trader, except there is more than one person involved in ownership of the business.
The Limited Liability Coy Law
The Limited Liability Coy Law provides the basic rules when setting up or operating a company in this country.
All companies must have:
- A registered name.
- One or more shareholders.
- One or more shares.
- One or more directors.
- A registered office.
A company can also have its own constitution or adopt the constitution contained in the Act. The company is a legal entity in its own right, which means it is a person in the eyes of the law. It is separate from a shareholder so if you bring any action against the company, it will not be an action against the shareholders themselves, but against the legal entity of the company.
partnership Act 1908
partnership is a legal relationship that is formed when two or more people form a business together intending to make a profit.
Partnerships are governed by the partnership Act 1908. Unlike a company, the partners are personally liable for the debts of the partnership. When a partner leaves the partnership they still remain liable for any debts which already exist at that time (but not for any future debts).
As with all business relationships it is important that the partners have a clear understanding on how the partnership is to operate.
Partners need to consider:
- Duration of the partnership.
- Nature of partnership business
- Capital contributions (initially and future banking arrangements)
- Division of profits, losses, drawings.
- Duties of each partner.
- Dispute settlement procedures.
- Retirement and expulsion of partners etc
Conduct of Business
Business in the USA is not controlled in any way. All businesses have to follow their own standards and principles.
However, business conduct is overseen by 3 government agencies:
- The Commerce Commission.
- The Securities Commission
- Takeovers Panel