I.

a. Characteristics of Corporation
Capital acquisition
-It can be easier for a corporation to acquire debt and equity, since it is not constrained
by the financial resources of a few owners. A corporation can sell shares to new
investors, and larger entities can issue bonds to obtain a significant amount of debt
financing.

-The means by which you acquire new assets for your business. You use your capital to
purchase assets like equipment, inventory, software, or even a business itself. The sole
purpose of these acquisitions is, ultimately, to grow the overall profits of a business and
reach out to more masses

Dividends
-A corporation pays its investors by issuing dividends to them. This differs from the
distributions made from a partnership or sole proprietorship to pay their owners.

-Dividends are corporate earnings that companies pass on to their shareholders. They
can be in the form of cash payments, shares of stock, or other property.

Double taxation
-A corporation pays income tax on its earnings. If it also pays a dividend to its investors,
the investors must pay income tax on the dividends received. This constitutes double
taxation of the earnings of the corporate entity
-Double taxation is a taxation principle referring to income taxes paid twice on the same
source of earned income. It can occur when income is taxed at both the corporate level
and personal level. Double taxation also occurs in international trade when the same
income is taxed in two different countries.

Life Span
-A corporation is its own entity, meaning it has a lifespan that only ends when the board
of directors and owners vote to dissolve the business. This means a corporation
extends beyond the lifespan of its human owners. Stock shares are transferable upon
death or have the ability to be sold and transferred from person to person. Transfers
happen either through a public stock exchange or through private transactions for
nonpublic entities.

-A corporation can theoretically operate forever, outlasting its owners. Conversely, the
owners may decide to terminate the corporation at any time.
Limited Liability
-A corporation grants the owners limited liability against debts and lawsuits filed against
the company. This means that any loans, credit cards, mortgages or revolving credit
with vendors, are the sole responsibility of the company. The same is true for any
lawsuits or insurance claims against the company.

-Any liabilities incurred by a corporation are not also transferred to its shareholders.
Instead, anyone trying to enforce a liability can only pursue the corporate entity for
satisfaction.

Professional Management
-The owners of a corporation may be able to vote on decisions for the board of directors
to make final directives on, but the shareholders are not necessarily the managers of
the company.

-In many cases, the investors who own a company are not actively engaged in its
management. Instead, they hire professional managers to handle the oversight of the
business on their behalf.

Owned by Shareholders
-The corporation is owned by shareholders. When the corporation is formed, a fixed
number of company stock shares are issued. Stock shares can be owned by one
person or many shareholders. When you think of the public corporations that sell stock
on the stock exchanges, there are potentially millions of owners to any given company.
Shareholders are allowed to vote based on the number of shares they own; the more
shares an owner has the more control he has over the company's decisions.

-Ownership in a corporation is based on the number of shares owned. Buying or selling

these shares shifts the ownership of a corporation to a different investor. A public
company that has its shares traded on an active stock exchange may have thousands
or millions of owners.
b. Components of a Corporation

Corporators- are those who compose a corporation, whether as stockholders or as

members.

Incorporators- are those stockholders or members mentioned in the articles of

incorporation as originally forming and composing the corporation and who are
signatories thereof.

Stockholders- owners of shares of stock in a stock corporation.

Members- corporators of a corporation which has no capital stock.

c. How are Partnership dissolved?

● Admission of nEW PARTNER
● Retirement or withdrawal of a partner
● Deatch, incapacity or bankruptcy of a partner\
● Incorporation of a partnership

d. What are the rights of a limited partner?

e. What are the types of dissolution in partnership?

1. Dissolution by Agreement:

A firm may be dissolved:

(i) With the consent of all the partners.

(ii) In accordance with a contract between the partners.

2. Compulsory Dissolution:

A firm is compulsorily dissolved:

(i) By the adjudication as insolvent of all the partners or of all partners except one.

(ii) By the happening of any event which makes it unlawful for the business of the firm to
be carried on or for the partners to carry it on in partnership.

3. Dissolution on the Happening of Certain Contingencies:

Subject to the contract between the partners, a firm can be dissolved by:

(i) The death of a partner.

(ii) The insolvency of a partner,

(iii) The retirement of a partner,

(iv) The completion of the adventure,

(v) The expiry of the term fixed.

4. Dissolution by Notice of Partnership at will:

If the partnership is ‘at will’ then any partner can get the firm dissolved by giving notice
in writing to other partners of the firm.

5. Dissolution by Court:

The court may order the dissolution of the firm at the suit of a partner in any of
the following ways:

(i) Where a partner of the firm has become of unsound mind.

(ii) Where a partner of the firm has become permanently incapable of performing his
duties as a partner.

(iii) Where a partner commits willful or persistent breaches of agreement.

(iv) Where a partner is guilty of misconduct,

(v) Where the business of a firm cannot be carried on save at a loss,

(vi) Where a partner has transferred the whole of his interest in the partnership to an
outsider.

(vii) Where on any other ground the court is satisfied that it is just and equitable that the
firm may be dissolved.
II.
III.
1. Partnership
● Definition – A legal form of business operation between two or more
individuals who share management and profits.

Corporation

Definition – A corporation maintains a separate and distinct existence from its

stockholders, directors, and officers; in other words, a corporation is viewed as a
different person in the eyes of the law.

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