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Legal Envi. of Bus

FINAL EXAM (Chapters 17-23, 28) Chp 18

QuestionAnswer
Essential characteristic is a partnership that does not treat all partners equally Limited Partnership (LP)
The one running the enterprise is called this _____ partner, and takes on all the risk, general partner
The one putting up the money is called the ______ partner, and no risk beyond is original investment limited partner
Which partner does NOT face limited liability? General or Limited? Limited
designate one or more “general partners” general partner is the manager of the partnership enterprise, also has unlimited liability for debts, torts etc. Articles of Partnership
designate one or more “limited partners” who contribute capital and share in profits but do NOT have management authority and do not have unlimited liability Articles of Partnership
What does the Articles of Partnership do? Put the world on notice
adoption of partnership articles that spell out particulars, name general and limited partners, designate capital contribution of each Formation of LP
unlimited liability for general partner—it is possible to name a corporation as a general partner, thus limiting the unlimited liability—liability for limited partner is limited to amount of capital contribution Liability
general partners have all rights, all duties—limited partners have all rights except right to manage Rights and Duties
if general partner leaves (_________), dies or becomes bankrupt, LP is ________ unless all limited partners agree and designate new general partner—limited partners may dissociate with proper notice or as provided in articles Dissociates/ dissolves
used by professional groups such as law firms and accounting firms—allows liability of ALL partners to be limited to their contribution Limited Liability Partnership (LLP)
____ ______ _______ is a hybrid between the partnership and the corporation Limited Liability Company (LLC)
--allows limited liability of all owners, like a corporation --allows tax consequences to pass through, like a partnership Limited Liability Company
--defined by state law --created by a written agreement—articles of organization --creates a separate legal entity from the partners --not necessarily a taxable entity --Members get limited liability for debts and torts Essentials of LLC
The people who set up an LLC are called: Members
_____ LLC is formed by adoption of articles of organization—form and information required for articles of organization will be provided for in state law LLC
-Limited liability of all members -Non-U.S. citizens can invest in an LLC Advantages of LLC
Disadvantages of LLC
all members participate in management, decisions made by majority member managed
members designate managers, can be members or outsiders manager managed
describes who will manage, how profits will be divided, transferability of interests, dissociation/dissolution issues, voting rights, meetings for memebers Operating agreement
(one member leaving) may be permitted by operating agreement Dissociation
(termination)—by majority vote of members, bankruptcy of LLC, other circumstances as described in operating agreement Dissolution
Members owe fiduciary duty to ___, may also owe fiduciary duty to ____ ______. LLC/ other members
_____ law may require operating agreement, may require it to be in writing—best practice is to have a written operating agreement State
Created by: 687631825
 

 



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