Business Organisations II: Legal Framework

Question 1

Partnership

Personengesellschaft

Answer 1

An association of 2-20 individuals who carry on a business for the purpose of making profit.

General partnership = all partners (managing or silent) have unlimited liability

Limited partnership = general partners, with unlimited liability, and limited partners, with limited liability

Limited liability partnership = all members have limited liability

Question 2

Unlimited liability

Answer 2

The person is fully liable for all debts and obligations of the firm; even their personal assets can be called upon to meet any business debts.

Question 3

Limited liability

Answer 3

The liability is restricted to the amount of their agreed capital contribution.

Question 4

Joint and several liability

Answer 4

Under certain circumstances, a general partner may have to meet more than his “share” of a particular obligation, namely in cases where his fellow partners are unable or unwilling to meet theirs.

(When fleeing to Mexico )

Question 5

Company - general aspects

Kapitalgesellschaft

Answer 5

A company is normally formed with the view to making a profit for it’s members. The capital is divided into SHARES (each member has a certain number of shares in accordance with the size of their holdings).
LEGAL ENTITY = the liability of it’s shareholder is limited to the issue price of the shares held by him (fiecare e responsabil de propria bucatica)

Question 6

Company - advantages and disadvantages

Kapitalgesellschaft

Answer 6

+ continuous existance, shares are freely transferable, limited liability => possible for companies to raise huge amounts of capital necessary for large-scale operations
- books must be available to the public, slow decision making process, conflict btw shareholders,managers and employees

Question 7

Corporation

KG, börsennotierte AG, Konzern

Answer 7

Group of companies

Publicly held corporation

Business organisation created by an Act of Parliament and both owned and controlled by the government

Question 8

Share

Aktie

Answer 8

“Any of the equal parts into which a company’s capital is divided, entitling its owner to a proportion of the profits” + gives the owner certain other rights

Question 9

Sole trader

Einzelunternehmen

Answer 9

Provides all capital required, makes all decisions and bears all the risks; has unlimited liability (adica when business fails, his private fortune can be called upon to meet the debts).
+ flexibility, quick decisions, relative lack of legal formalities
- difficult to raise additional capital and expand