| Victor_Mallix | Date: Tuesday, 08 October 13, 7:56 PM | Message # 1 |
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| A Short Introduction to the Types of Legal Commercial Organization in the Galactic Republic with reference to the creditibility of various types of corporation in order to aid lenders in making prudent decisions.
Printed at the Request of the Office of The Right Pecunious Victor Mallix, Executive Loan Officer of the IGBC, by the IGBC Loan Office Fiscal Responsibility Awareness Department.
Megacorporations
A Megacorporation is defined as a Corporate Entity (usually a Publicly Listed Company or Conglomeration thereof)
Examples of these include but are not limited to(for brevity subsidiaries and individual members not detailed at length) The Trade Federation, Corporate Alliance, the InterGalactic Banking Clan, the Commerce Guild.
Due to the sheer size of Megacorporations and their diversity it is impossible to pin down the exact definition of such a group. However they are often characterized by:
Annual incomes in the many trillions of credits.
A wide production and consumer base or operating area for services provided (usually many sectors across)
Huge Financial Reserves and equally massive physical assets (equating in some cases to dozens of inhabited worlds)
Close relationships across the Galaxy with other Megacorporate and Governmental organizations to facilitate cordial relations.
Not for Profit Organizations
These types of Organization do not in general borrow greatly as they rely upon subscription and balancing the budget thereof. These groups can fail although it is rare their debts are significant and as such are generally written off due to the charitable nature of the enterprise.
CIC or community interest company
- Not for profit but not a charitable organization in the legal sense, provides a tax free status for a project or organization which provides considerable aid to a local community.
- Tax Exempt
- Simpler to aquire than tax status.
CIO or Charitable Incorporated Organisation
- Not for profit and must provide a tangible benefit to society, ethnic groups, humanitarian causes etc
- Tax Exempt
- Benefit to society must be proven in rather stringent terms.
Industrial and provident society, e.g. a co-operative of workers forming a group which has tax free status to help provide mutual support etc.
Partnerships:
General partnership
In the commercial and legal parlance of most countries, a general partnership (the basic form of partnership under common law), refers to an association of persons or an unincorporated company with the following major features:
Created by agreement, proof of existence and estoppel.
Formed by two or more persons.
The owners are all personally liable for any legal actions and debts the company may face
It is a partnership in which partners share equally in both responsibility and liability.
Note: As partners are liable for the success or failure of the business, their own personal and economic standing dictates whether they are likely to be able to attract funding.
If it folds: The Partners are liable for the companies debts.
LLP or Limited liability partnership
A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence. This is an important difference from the traditional unlimited partnership under the Partnership Act 1890, in which each partner has joint and several liability. In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation.
Note: Basically the liability of the partners is limited and the "legal entity" may assume debt (which just disappears as the company does into the wind, highlighting the futility of our economic system). A limited liability partnership has an "existence" separate from its partners.
LP or Limited partnership
A partner in a partnership whose liability is limited to the extent of the partner's share of ownership. Limited partners generally do not have any kind of management responsibility in the partnership in which they invest and are not responsible for its debt obligations. For this reason, limited partners are not considered to be material participants.
Formal Companies
Limited Company: a private company limited by shares, the shares not being traded publicly
plc (public limited company): a company whose shares may be traded publicly. Requires an authorized minimum share capital of 5,000.000 Dataries; of which it must have allotted shares to the value of at least 5,000,000 Dataries and a minimum of 25% must be fully paid up prior to starting business.
Private company limited by guarantee. Such a company must include Limited or Ltd. at the end of its name (so cannot readily be distinguished from a private company limited by shares), unless it cannot distribute its profits. Guarantee companies are commonly used by not for profit organizations, which may omit Ltd. at the end of their names.
Unlimited company. A company either with or without a share capital whose members or shareholders do not benefit from limited liability should the company ever go into formal liquidation.
If it folds: the shareholders must pay debts.
Sole proprietorship/sole trader
A sole proprietorship, also known as the sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business.
The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's. It is a "sole" proprietorship in contrast with partnerships. A sole proprietor may use a trade name or business name other than his or her legal name.
If it folds: The trader is liable for all debts accrued by his company.
General Notes on likely Credit available.
Creditibility/Scrutiny for Lending to the following:
Not for Profit Organizations
These don't pay tax and rely upon donations from the public in order to fund various services of benefit the community or part of it. As such these groups extremely rarely take out debts, often when they do so they are small and insifnificant. No financial organization would lend large sums to a charity.
Creditibility/Scrutiny for Lending to the following:
General Partnership
Limited Liability Partnership
Limited Partnership
Partnerships are in general small companies based around specialized professions. The level of scrutiny applied to any loan application will be based upon the individual pedigree and credit rating of the partnership in question and its partners. It is likely partnerships ought to be able to loan modest sums (a legal firm might borrow to build a new office) but it is unlikely a partnership would be loaned astronomical sums of money. Such small organizations, while liable still pose a demonstrable risk to banks and are not optimal to extend large loans to at normal rates.
Creditibility/Scrutiny for Lending to the following:
Private Company Limited by Guarantee
Public Limited Company
Large companies generally fall into these categories. Of course viewing the accounts will determine if a loan would be made but usually the assets of such a large concern would offset the money borrowed. In general loaning more than half the value of such a company may be considered foolish in financial sectors.
Creditibility/Scrutiny for Lending to the following:
Unlimited Companies
Are really complicated but it's a form of large conglomerate structure. As such their borrowing profile is similar to the above.
Creditibility/Scrutiny for Lending to the following:
Sole Traders
Sole Traders require an extremely solid plan to get any credit at all, or collateral in some form. Credit extended to Sole Traders is effectively betting on an individual not a business.
Creditibility/Scrutiny for Lending to the following:
Megacorporations
It is uncommon that a Megacorporation need to seek significant credit and would certainly damage its consumer confidence unless the circumstances were exceptional. If small (compared to the assets of the company) sums might be required on short notice (for example a Megacorporation with a lot of money in technical plant with considerable value required to buy certain mining rights swiftly it would have small trouble gaining a loan against its collateral.
Victor Mallix
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Executive Loan Officer of the InterGalactic Banking Clan
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