BURCHARDT, Nadia Micaela

DNI 38.369.179
Lengua y Derecho I
Ctedra Marcelo Pepe

PART I
A- Complete the following table

Sole Proprietorship Partnership Corporation

Method Most sole proprietorships There are three methods by 1. Promotional activities
of are created by simply which partnerships can be (preliminary undertakings
creation starting up business. formed: with the purpose of
Depending on the state, - By contract: express financing the future
there may be different agreement (either oral or corporation). Promoters
restrictions or written) between the parties. (people who, either for
requirements on licensing In general, the agreement themselves or for others take
laws and filing that establishes the the steps to organize the
requirements. partnership is done in future corporation) have to
writing to prevent conflicts issue a document called
in the future. This is called a prospectus describing the
partnership agreement, companys financial
which includes essential operation so that investors
information about the are able to make an
company (name, duration, informed decision. The
contributions made by each promoter also secures the
partner, reserve funds, duties corporate charter.
and limitations of the Promoters are held
partners, termination personally liable on
procedure, etc). preincorporation contracts,
- By proof of existence: but they can include a clause
there are cases in which a in the agreement which
partnership is created holds the corporation liable
because of the way people in the event of a breach of
do business with one contract. The promoter
another. When conflicts remains liable until the
arise regarding the existence corporation assumes the
of a partnership (when one preincorporation contract by
partner claims it exists while novation - the corporation

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the other denies its
existence) courts will
analyze a series of elements
to determine whether there
is a partnership or not. The
most important element is
clear evidence that parties
are sharing the companys
profits.
- By estoppel: a partnership
is created by estoppel when
one person causes a third
party to the reasonable
belief that a partnership
exists. Silence despite a duty to incorporate.
to speak may lead to the
existence of a partnership by INCORPORATION: this
estoppel. These are not
actual partnerships, they are
simply doctrines used by
court to prevent injustices
toward third parties and that
is why it only benefits them
and not alleged partners.
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DNI 38.369.179
Lengua y Derecho I
Ctedra Marcelo Pepe
takes his or her place.
The promoter contacts
potential investors
(subscribers) who wish to
purchase capital stock in the
future corporation. This is
known as subscription
agreement. Subscribers
become shareholders once
the corporation is formed.
2. Incorporation.
Requirements:
- STATE CHARTERING:
selecting the state in which
- ARTICLES OF
document includes the most
important information about
the company.
- CERTIFICATE OF
INCORPORATION: the
articles of incorporation are
sent to the secretary of state
who issues a certificate of
incorporation that authorizes
the company to conduct
business.
- FIRST
ORGANIZATIONAL
MEETING: where the
incorporators elect the first
board of directors and adopt
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DNI 38.369.179
Lengua y Derecho I
Ctedra Marcelo Pepe

the bylaws.
Limited liability
companies (LLC) require
two persons (people,
corporations or other legal
entities) to be in charge of
the incorporation process.
They must file an
application to the state for
permission to set up an
LLC. The name of the
corporation must include
Limited Liability
Company or Ltd..
Corporations can also be
classified as private or
public depending on
whether or not they sell their
stock to the public at large.
They can be domestic or
foreign (the latter needs a
certificate of authority to
operate in another state).
Courts can attribute
corporate existence to
improperly formed
corporations. De facto
corporations are those in
which incorporators have
failed to comply with
statutory provisions for
proper incorporation. To
obtain this status, there must

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 BURCHARDT, Nadia Micaela
Legal Sole proprietorships have Most states follow the UPA
position no separate legal entity (Uniform Partnership Act),
from their owner. which establishes that
partnerships should be
treated as separate entities
for most purposes. As an
entity, a partnership can
hold the title to real and
personal property in its
name, and it is also treated
as an entity in federal
courts suits as well as
bankruptcy proceedings.
Members There is only one member: The members of a
the owner of the sole partnership are called
proprietorship. partners. Partners can
either be individual persons
or entities.
They are entitled to the
proportion of profits and
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DNI 38.369.179
Lengua y Derecho I
Ctedra Marcelo Pepe
be a state statute under
which the corporation can
be validly incorporated, and
the parties must have made a
good faith attempt to follow
the statutes requirements.
Moreover, the corporation
must have started doing
business as such.
A corporation is a legal
person with a separate legal
entity from its members. It
is authorized by a state or
federal statute to operate. A
corporation has a separate
legal entity from its
members, as a result, it can
own property in its name
and sue or be sued. The
death, incapacity or
bankruptcy of a manager or
shareholder does not affect
the existence of a
corporation.
The members of a
corporation are
shareholders. A shareholder
is any individual that
purchases a share of stock in
a corporation. Shareholders
are owners of the
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losses specified in the
agreement (the distribution
of profits is relative to each
partners share in the
business). If not specified,
the UPA determines that
profits (and the losses) will
be shared equally.
Partnerships are personal-
type structures so the
personal element of the
partners is essential to the
point that the company may
be dissolved if one of the
members dies.
In limited partnerships,
there are two types of
members: general partners,
who are responsible for
managing the company and
limited partners, who only
contribute cash, property or
service but do not
participate in managing the
partnership.
Liability Due to the fact that no Partners are personally
separate legal entity is liable for the debts of the
created, the owner of the partnership. They are also
sole proprietorship is jointly and severally liable
subject to unlimited for the partnership's
liability. This means that obligations. That is to say,
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DNI 38.369.179
Lengua y Derecho I
Ctedra Marcelo Pepe
corporation as well. Since
companies are capital-type
structures, the continued
existence of the corporation
is not affected by changes in
the body of shareholders. A
shareholder can also sue the
corporation (and vice versa)
and, in some cases,
shareholders can sue on
behalf of corporations.
In close corporations
shareholders are either
members of the same family
or few persons who are
personally known to one
another. These corporations
often operate like
partnerships and the
personal element is very
important (unlike other
corporations).
The owners of limited
liability companies (LLC)
are members and the
individuals who run it are
managers
Shareholders are subject to
limited liability. The
owner's personal assets
cannot be attacked in the
event that the company
defaults on its obligations.

he or she is accountable for either all of the partners can
the obligations that arise in be sued together or one or
doing business.
Duration/ Since the owner is in
terminati complete control of the
on company, he or she decides agreement may establish
how long the sole
proprietorship will last.
This means that these
types of companies can be
terminated at will.
Moreover, sole
proprietorships are
BURCHARDT, Nadia Micaela
more partners can be sued
separately by a third party.
Nevertheless, partnership
assets must be exhausted
before a creditor can attack
a partners personal assets.
In registered partnerships
having limited liability
(RPLL or PLL) partners are
not jointly and severally
liable for torts committed by
other partners or by the
partnerships employees,
unless the partner or
employee was under direct
control of that partner.
In limited partnerships
general partners have
unlimited liability while
limited partners have limited
liability.
- Partnership for a
duration: the partnership
that the company will
operate until a certain date
or until a particular project
has been finished.. If a
member withdraws
prematurely, it will be a
breach of agreement and
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DNI 38.369.179
Lengua y Derecho I
Ctedra Marcelo Pepe
In professional
corporations, shareholders
or professionals can be held
personally liable for
malpractice of other
shareholders within the
scope of the corporation, but
they cannot be held liable
for liability arising from
torts committed by other
members.
The termination of a
corporation has two steps:
1. Dissolution. It is the legal
death of the corporation, the
end of its existence.
It can be voluntary, when
the shareholders
unanimously vote for
dissolution or the directors
propose it and shareholders

terminated upon the death
or disability of the owner.
BURCHARDT, Nadia Micaela
he or she will incur in
liability from the resulting
losses.
-Partnership at will: there
is no fixed duration.
Partners can dissolve the
partnership at any time
without violating the
agreement and without
being held liable for
resulting losses.
Dissolution of a partnership
can be caused by acts of
partners, by operation of
law (in the case of a
partners death or
bankruptcy, or whenever an
event makes it illegal for the affairs. In voluntary
partnership to carry on
doing business) or by
judicial decree (when a
partner is declared insane or
incapable of performing his
or her duties under the
agreement, when it becomes
apparent that the business
can only operate at a loss or
when a partners misconduct Nonetheless, in involuntary
involves company business
or his or her inappropriate
behavior reflects negatively
on the company). After
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DNI 38.369.179
Lengua y Derecho I
Ctedra Marcelo Pepe
agree.
It can be involuntarily
dissolved by the State via
an action brought by the
secretary of state or by the
state attorney general due to,
for example, ultra vires acts
or as a result of obtaining
the corporate charter
through fraud. It can be
involuntarily dissolved by
shareholders through a
court order.
2. Liquidation. When the
dissolution is voluntary, the
board of directors, acting as
trustees, is in charge of
winding up the corporations
dissolutions, depending on
whether the directors wish
to act as trustees or not, or
whether shareholders wish
for them to act in that
capacity or not, a receiver
may or may not be
appointed by the court to
wind up corporate business.
dissolutions a receiver is
always appointed.
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dissolution, the partnership
carries on for the limited
purpose of winding up.
Partners cannot enter into
new obligations on behalf of
the partnership, they can
only finish operations or
transactions that began but
were not finished by the
time dissolution took place
and to wind up the business.
Manage The owner is also in Member-managed
ment charge of management (although there may be
because he or she is in delegation). Jointly-
complete control over the managed and personally-
company. All decisions involved. Unless otherwise
regarding the sole agreed, all partners have
proprietorship are made by equal rights in managing the
its owner. partnership, and each
partner has one vote in
management matters,
irrespective to the
proportional size of his or
her interest in the company.
If the partnership is large,
daily management
responsibilities tend to be
delegated to a management
committee made up of one
or more of the partners.
When it comes to ordinary
matters, the majority
controls the decisions.
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DNI 38.369.179
Lengua y Derecho I
Ctedra Marcelo Pepe
Management-managed.
Collegiate body (usually
between 8 to 12 directors)
called board of directors,
elected by shareholders.
They are responsible for the
hiring of corporate officers
and other employees in
order to carry out the daily
business operations of the
corporation. They are in
charge of ensuring that the
corporations rules are
followed.
If a corporation has fewer
than fifty shareholders, it
can do without the board of
directors, but it must assign
someone to the duties that
the board would have
performed.
The quorum is more than
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However, matters that affect
the nature of the partnership
or are outside the ordinary
course of business require
unanimous consent of the
partners.
In limited partnerships,
general partners are in
charge of managing the
company and maintain
control of the companys
treasury. Limited partners
are not entitled to
management rights.
Taxation Pass-through taxation (or Pass-through taxation.
single taxation). Sole Partnerships pay no taxes
proprietors pay personal themselves. For taxation
income tax on the purposes, a partnership is
business profits. The treated as an aggregate of
profits made by the the individual partner, which down to shareholders as
company are reported as means it is not a taxpaying
personal income by the entity. Income from the
sole proprietor. partnership is taxed as
individual income for each
partner.
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DNI 38.369.179
Lengua y Derecho I
Ctedra Marcelo Pepe
half of the total number of
directors, but a higher
quorum may be necessary
for certain matters.
Close corporations
management is similar to
that of partnerships and sole
proprietorships: there is only
one shareholder or a small
and closely-knit group of
shareholders who hold the
positions of directors and
officers.
Double taxation. Corporate
profits are taxed (both by
federal and by state
government). Corporations
may choose to hand profits
dividends. Dividends are
taxable because they are
regarded as ordinary income
to the shareholder who
receives them.
S corporations (small
businesses) are not doubly
taxed they are not taxed at
the corporate and
shareholder level. They only
pay income taxes at the
shareholder level.
Limited liability companies
 BURCHARDT, Nadia Micaela
DNI 38.369.179
Lengua y Derecho I
Ctedra Marcelo Pepe

do not pay taxes at the

corporate level either.

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