Unit 3 National Interest in a World Community

1.  Introduction l The majority of business organizations are corporations, others are general partnerships(一般合伙企业), limited partnerships（有限合伙企业）, and sole proprietorships（独资企业）. Less common are professional corporations（专业公司）, joint-stock companies（合股公司）, business trusts（商业信托） and joint ventures（合资企业）. The factors to be weighted in making the decision are ease of formation, financial resource available, control, taxation, management skills available, ability to raise capital, continuity, and legal capacity（法律地位）.

owned by a single person. 2. Sole Proprietorship owned by a single person. The principal advantage of the sole proprietorship is that the owner has exclusive control over its operations without accounting to board members, partners, or stockholders. Disadvantages___ first, the owner is exposed to unlimited liability. Second , it is normally not in the best position to raise large sum of money. Third, the lack of continuity. If the owner dies, or becomes too ill to continue operation of the business, there is no separate legal entity in existence with which the public, creditors（债权人）, or suppliers can deal to ensure the continuity of the business.

3. General Partnership An association of two or more persons to carry on, as co-owners, a business for profit.

The common law does not recognize a partnership as a legal entity（法律实体）, but usually as an aggregation （集体）of individuals. Thus, unlike a corporation, a partnership is not a fictional person with a distinct legal existence apart from its members.

Does not require a formal written agreement, an agreement in writing contains names of the partners, name, location, purposes, duration of the partnership, allocation of profits（利润分配） and losses among partners, capital contributions by partners, partners’ rights and responsibilities, dissolution procedures.

Dissolution（解散） by act of the parties 1) by agreement; 2) withdrawal or addition of a partner; 3) violation of the partnership agreement by one of the parties; of 4) accomplishment of the purpose for which the partnership was formed. Dissolution by operation of law 1) by the death of a partner; 2) the bankruptcy of a partner or the partnership; 3) the illegality of the partnership; or 4)by order of a court.

Termination（终止）__ even though the partnership is dissolved, it does not actually terminate until the partnership affairs are completed. Liquidation(清算） ___ occurs between dissolution and termination. During this process, business affairs are put in order, receivables are collected, accountings are made, payments to creditors are made, and the remaining assets are distributed to the partners as provided in the Uniform Partnership Act.

4.Limited Partnership One or more partners in the limited partnership have limited liability, that is, their liability is limited to the extent of their investment in the partnership, and the limited partners have no control over the everyday management of the partnership. The limited partnership involves passive investors who are like shareholders in a corporation. Thus limited partnership has features of both a general partnership and a corporation.

5.Joint Stock Company An unincorporated business enterprise with the ownership interest represented by shares of stock. It can be created with little formality and no initial capital outlay（创办资本费用） is required. (they are rarely seen now.) The shareholders are personally liable for all the association’s obligations, while they share the profits in proportion to their controlling interest in the company. The joint stock company is controlled by a board of directors and officers.

6.Features of Corporations: a corporation is a separate legal entity for all purposes. it is not mortal（凡人） theoretically. It continues until dissolved, merged, or otherwise terminated. the owners of the corporation, called shareholders, enjoy limited liability. it is easy to transfer ownership interests by buying or selling shares of stock freely. the separation of ownership from management. it pays taxes on its earnings. the corporate form requires compliance with an array of formalized procedures. And government more closely supervises corporations than partnerships or sole proprietorships.

Types of corporations 1)public corporation are established by the government. (eg. The U.S. Postal Service) 2) quasi-public（私营公用事业的） corporations are public service companies, such as public utilities. 3) Private corporations are those established for private interest. Private corporation may further be divided between nonprofit and profit. Nonprofit ones are formed for charitable or religious purposes. Profit ones are usually formed to carry out business. 4) Profit corporation are further divided into professional(专业公司), closely held（私募公司）, and publicly held（公募公司）.

Corporation management Shareholders elect a board of directors to manage the corporation. The board, in turn, delegates the day to day operations to officers. The directors and the officers comprise the management of the corporation. The board of directors are responsible for making the policy of the company, declaring dividends, proposing amendments to articles of incorporation and bylaws, proposing candidates for the board and removing officers. Officers are appointed by the board of directors pursuant to the bylaws and are responsible for implementing the policies of the board and for the oversight of the day to day operations of the business. Officers include a president, vice presidents, secretary, and treasurer.

Shareholders             i.  common shareholders and preferred shareholders            ii.   preferred shareholders are entitled to receive their dividends before common shareholders. On dissolution, preferred shareholders are entitled to distributions of assets before common shareholders. Common shareholders have voting rights whereas preferred stockholders normally can vote only on extraordinary matters.

Dividends are portions of corporate earnings distributed to shareholders. A board maintains almost absolute discretion (判断力） to declare or not declare dividends. Dividends may be in the form of cash or stock.