LGS 200 Final Exam Study Guide LGS 200 Final Exam Study Guide Chapter 16 Sole Proprietorship page 392 the owner is the business Advantages proprietor receives all of the profits easier and less costly to start up due to less legal formalities more flexibility etc Disadvantages the proprietor alone bears the burden of any losses or liabilities incurred by the business enterprise unlimited liability legal responsibility when owner dies so does the business opportunity to raise capital is limited to personal funds etc Franchise an arrangement in which the owner of a trademark trade name or copyright licenses others to use the trademark trade name or copyright in the selling of goods or services Franchisee purchaser of franchise Franchisor seller of franchise A franchise can operate as in independent businessperson but still obtain the advantages of a regional or national organization Types o Distributorship o Chain Style Business Operation o Manufacturing or Processing Plant Arrangement Partnership arises from an agreement express or implied between two or more persons to carry on a business for a profit joint control over its operation joint management and right to share profits Partnership agreement any terms the parties wish Chapter 17 LLC page 417 articles of organization must be filed with a central state agency own part of business Advantages liability of members is limited to amount of their investments flexibility with the LLC offers in regard to business operations and management two or more members can choose to be taxed either as a partnership or a corporation etc Disadvantages state LLC statutes are not yet uniform lack of case law dealing with LLC s etc Operating Agreement contain provisions relating to management how profits will be divided the transfer of member interests whether the LLC will be dissolved on the death or departure of a member etc Chapter 18 Corporations page 430 Domestic Foreign and Alien Public and Private Non profit ex churches Close Corporations one whose shares are held by members of a family or by relatively few persons You own stock of the business evidence of owndership Incorporation Procedures Articles of Incorporation include basic information about the corporation and serve as a primary source of authority for its future organization and business functions Role of Directors page 440 Election of Directors o Initial Board of Directors o Term of Office o Removal of Directors o Vacancies on the Board of Directors Board of Directors Meetings o Quorum minimum number of members of a body of officials or other group that must be present in order for business to be validly transacted Rights of Directors o Participation and Inspection o Completion and Indemnification Responsibilities o Duty of Care good faith being a good person right vs wrong good will conscious o Duty of Loyalty competing with corporation taking personal advantage of a corporate opportunity having an interest that conflicts with the interest of the corporation engaging in insider trading not public authorizing a corporate transaction that is detrimental to minority shareholders and selling control over the corporation o Conflicts of Interest disclosure of any conflicts of interest Duty of Majority Shareholders page 451 A majority shareholder is regarded as having a fiduciary duty to the corporation and to the minority shareholders o This occurs when a single shareholder owns a sufficient number of shares to exercise actual control over the corporation majority owes a duty to minority Chapter 19 Agency page 460 Employer and employee relationships Agents all employees who deal with third parties o Example salesperson in a department store is an agent of the store s owner and act s on the owner s behalf Agent s Duties to the Principal o Performance o Notification o Loyalty o Obedience o Accounting Principal s Duties to the Agent o Compensation paid for work performed o Reimbursement and Indemnification cover personal expenses for the company Keeping receipts for purchases made by company o Cooperation o Safe Working Conditions To terminate a relationship have it in writing page 481 Chapter 20 Employment at Will either party may terminate an employment contract at any time and for any reason unless the contract specifically provides the contrary Exceptions o Contract Theory o Tort Theory o Public Policy Employee Privacy Rights page 497 Electronic Monitoring in the Workplace Email computer files voicemail video recordings e