USA Law and Practice Contributed by: Matt Hurd, Melissa Sawyer and Scott Crofton, Sullivan & Cromwell LLP
Sullivan & Cromwell LLP 125 Broad Street New York NY 10004 USA Tel: +1 212 558 4000 Email: Chamberscorpgov@sullcrom.com Web: www.sullcrom.com
1. Introductory 1.1 Forms of Corporate/Business Organisations
er entity forms (including entity-level taxation), large and widely held public companies are usu - ally organised as corporations, as they are rec - ognised as the traditional corporate form and tend to be the preferred investment vehicle for investors. Certain states provide for other forms of for-prof - it corporations, such as public benefit corpora - tions and statutory close corporations. A public benefit corporation is organised for the purpose of a public benefit rather than for the primary purpose of enhancing stockholder value. Statu - tory close corporations (which are required to have less than a specified number of stockhold - ers) are typically subject to fewer governance formalities than ordinary corporations. Partnerships There are two forms of partnerships: general partnerships and limited partnerships. A general partnership is an entity in which two or more persons carry on the entity’s business. In a general partnership, each partner has the authority to undertake transactions, execute contracts and incur liabilities on behalf of the partnership, and is also personally responsible for the obligations of the partnership. State law does not require formal documentation in order
In the USA, there are three principal forms of business organisations: corporations, partner - ships and limited liability companies. Corporations Most public companies are corporations. A cor - poration is an entity owned by stockholders, managed by a board of directors and established by the filing of a certificate of incorporation or similar document with the secretary of state of a US state. Corporations can be privately held or publicly traded on a stock exchange, with public corporations having more stockholders. The board of directors typically delegates day- to-day management of the corporation to the corporation’s executive officers but exercises oversight over such management. A corporation is liable for the obligations of its business, but its stockholders are generally not held liable for such obligations. State law typically requires a corporation to hold board meetings and annual stockholder meet - ings. Although corporations have comparatively less governance flexibility and are subject to certain other disadvantages compared to oth -
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