LAW 1310 Lecture Notes - Lecture 1: Corporate Law, Legal Fiction, Capital Formation
23 Jan 2018
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Topic 1: how you organize your business: sole proprietor. High risk because if the business cannot pay the funds you have to pay the money out of your pocket. Hard because you have to reach pockets, ask for a loan from family and friends and banks etc. Banks, however needs collateral so it is hard for them to raise money for the business: partnership. Advantages: you own it and run the business together. Disad(cid:448)a(cid:374)tage: if the part(cid:374)ership (cid:272)a(cid:374)"t pay the (cid:271)ills the(cid:374) the part(cid:374)ers ha(cid:448)e to pay the bills out of their pocket. You get to work more as there are more people involved (as opposed to sole proprietor) The partners have to pay the bills even if the business goes broke. Raising capital is difficult has well because they are putting everything that they have because they have to go to family, friends, banks etc: the corporation. Three key attributes: ease of capital formation.
