Corporate Controls

Corporate Controls
3 mn read

Business entails many rules and regulations set at the beginning, which helps in the running of the business. Many people join a business partnership with different expectations. Once a business partnership is formed, the regulations take control of everything and whenever any critical decision has to be made, guidelines in the partnership deed has to be followed to the later and with the help of board members, a decision concerning anything not included in the deed can easily be arrived at (Coates et al. 2017). One may at times want to sell his or her shares in a business because of one reason or another but the question, which always comes into the mind of shareholders, is, is it legal and what does partnership deed say about selling and buying of shares. A member in a business partnership can decide to quite anytime from the business whenever he or she feels like. What matters is the regulation regarding how he will be dissolved and his money in the business will be shared. In the above case study, the shareholder will only be able to sell her shares to other people once her has written an official letter informing the board of why he wants to dissolve. Through the three board members, he will be able to write an official letter, which will go through and by the end of the whole process; a shareholder will be able to sell them from the board’s mandate (Kraakman et al. 2017). As stated in the partnership deed, one is able to sell his or her shares at the end of the accounting period. Otherwise, an official process has to be followed to get it done. Companies and even shareholders have the opportunity of buying shares from the company or even quitting shareholders as if the required amount of money is available. The company can decided to buy all the shares from the leaving shareholder to ensure the business remains intact. As well a company can buy shares at the end of the academic year. Share holders on the hand has almost the same restriction as the companies but the difference is, a shareholder can buy shares at any time add up to his or her existing shares but there are rules guiding such kinds of occurrence

Partnership is a business owned by more than one person and hence the control is spread over to all the members in the partnership (Parisi et al 2017). A problem comes when one member is quitting has a plan of selling his shares to a third party. Third party as used in this scenario is anyone who is not included in the partnership deed. It therefore means that when one is selling his shares to a third party, he or she is moving her products to a completely different business from the one he or she is. One is allowed to only do this at the end of the accounting period. In most cases when a shareholder forces her way and sells his products to a third party, there is a high possibility that the partnership is broken down and that marks the end of the partnership. Partners in many cases are advised to sell their shares to the existing members of the business or the company itself to ensure that it does not terminate since selling shares to a third party automatically ends the business. Prices of closely held corporations are not traded in the open market and therefore, their prices tend to be much stable. Triggering pricing for closely held corporations is always a problem but once sales order has been given, it has to be done since they lack market in the open air (Armour et al. 2017). It may take time to complete the sales provide, but at the end of it, they have to be sold. Board decisions should be long term and in anyway deeply look into an idea before making their decisions since their decision is final and everyone has to comply with it. Their decisions such as that of a client wanting to leave the partnership should be their own opinion and such will require unanimous attention.

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