Sole proprietorship: “It’s all personal” – the SP can decide everything about running the organization
General partnership: All GPs can make decisions; usually, they split it up, but to an outsider, any of them can usually make decisions on behalf of the partnership (“apparent authority”). Deadlocks/drawn-out discussions are possible.
Limited partnership: No difference for the GP(s), but limited partners can’t participate in management
Minority shareholder gets “frozen out” – can stem from personality conflict, business decision disagreement…
Brooks v Hill
Specific issue: Is Leroy liable for minority shareholder oppression?
General issue: If a majority shareholder uses the business for his/her personal purposes, resulting in lower share value, and subsequently seeks to buy out a minority shareholder, is the majority shareholder liable for oppression?
Sole proprietorship: “It’s all personal” – business usually ends when SP can no longer run it b/c of death/disability
Partnership: Without advance written agreement to the contrary, partnership dissolves when a partner dies, becomes insolvent or leaves; termination at will, but can contract to provide damages to remaining partners. Partnership can be inherited.
Corporation: Strongest continuity of life – death/disability of a shareholder doesn’t affect legal status of the corporation. Easy to transfer ownership of shares. Easiest to preserve good will. (But, think about Apple and Steve Jobs)
LLC: Generally dissolved by death, retirement, bankruptcy, being left by one of the members. Remaining members can unanimously agree to continue the business operations.
Sole proprietorship: “It’s all personal” – SP puts in own $; can take any of it not committed to third parties whenever
General partners: Can sell their stake at buyout time, but buyer doesn’t become a partner w/o unanimous consent of other Ps; hard to sell before buyout time; doesn’t benefit from goodwill if other Ps continue the business
Limited partners: Can sell, but not much of a market
Close corp: Restrictions may apply; market is small (strings attached; no incentive unless board influence is possible)
Public corp: Easy – just sell the shares on the public market.