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Corporate bargain--limited liability ICHARACTERISTICS OF A CORPORATION APRINCIPAL CHARACTERISTICS OF A CORPORATION aEntity Status--a corporation is a legal entity created under the authority of legislature bLimited Liability--as a legal entity a corp is responsible for its own debts its shs liability is limited to their investment cFree Transferability of Interest--shares representing ownership interests are freely transferable dCentralized Management and Control--a corps management is centralized in a board of dirs and officers Shs have no direct control over the boards activities eDuration--Continuity of Existence--a corp is capable of perpetual existence fTaxation--a corp as an entity pays taxes on its own income shs are taxed only on dividends gRemember Attributes of the Corporation--CLIFF 1Centralization of management 2Limited liability 3Forever perpetual duration 4Freely alienable shares can be sold BCORPORATIONS DISTINGUISHED FROM OTHER FORMS OF BUSINESS ASSOCIATIONS 1GENERAL PARTNERSHIPS--in most states pships are governed by the Uniform Partnership Act UPA However the Revised UPA RUPA has been adopted by a few states aAggregate Status--a pship is an aggregation of two or more persons who are engaged in business as co-owners Although not a legal entity a pship is treated as one for certain purposes eg ownership and transfer of property RUPA confers entity status on pships bUnlimited Liability--every partner is subject to unlimited personal liability on pship debts cTransferability of Interests--a partner cannot make a transferee a member of the pship She can however assign his interest in the pship thus permitting the assignee to receive distributions of profits Because the assignee does not become a member of the pship he is not entitled to participate in pship business or management dDuration and Dissolution--a pship cannot have perpetual existence It is terminable at will unless a definite term is expressed or implied and is also dissolved by death incapacity or withdrawal of any partner 1Wrongful dissolution--pships can also be dissolved in contravention of the pship agreement by the express will of any partner
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