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MartinRoberts Offline


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10.05.2023 12:15 The essence of a Limited Liability Company Zitat · Antworten

Limited Liability Corporations (LLC) are referred to as corporations with corporate structures where the members (shareholders) cannot be held personally liable for the debts or liabilities of the corporation, meaning only the assets of the corporation itself are at risk. For this reason, this corporate form is considered “limited liability”, while the combination of the characteristics of a corporation and a partnership as a characteristic of limited liability is similar to that of a corporation, and the availability of flow-through taxation for the partners is a characteristic of partnerships. LLC as a viable option if the person wants to incorporate a commercial corporation or small business locally or internationally within certain limits.

The nature of a joint stock company
In the case of a joint-stock company (JSC), the shareholders of such business entities are fully liable for the debts of their companies. This means that the shareholders of the public company have limited liability or liability limited by guarantees or shares. Normally, the shares of a JSC are transferrable and can be traded on a legal exchange between private parties (private JSC) or publicly (public JSC). A public company can raise large amounts of capital by issuing its shares. As a rule, joint-stock companies are formed by one or more persons for the purpose of large-scale business operations. It is represented by a board of directors, which consists of at least one person and can also be represented by an authorized representative.

Differences between LLC and JSC
JSC and LLC are the two most common company types these days. There are some key differences between these two forms of legal entities.

JSC issues stocks and bonds per procuration of stocks that may be offered to the public, unlike LLC, which does not issue stocks or bonds. JSC share transfer can be executed upon consent of both parties, if it is LLC, they can be transferred under an agreement certified by a notary public provided that this agreement is executed with the consent of 75% of the shareholders 75% of capital. In LLC, the capital is not divided evenly, but in JSC, the capital is divided evenly.

The fields of activity of companies can also vary. LLC does not engage in business fields such as banking and insurance and other fields determined by specific laws, unlike JSC, which can operate in all fields. For this reason, financial institutions find the structure of a JSC more credible and influential. Another formal difference between JSC and LLC is that the former can be formed for an indefinite period of time as opposed to the latter which is only intended to be formed for a period of 99 years. At JSC, the minimum number of shareholders is 5 and there is no provision as to the maximum number of shareholders. In contrast, the minimum shareholder number for LLC is 2 and the maximum is 50.

However, these two types of businesses have something in common. There are some similarities between JSC and LLC. Both can be registered by filing a memorandum of association with the state registry. Both may be foreign-owned and have foreign shareholders. In both cases, shareholders' liability is limited to their contributions. Both require that at least one investor is a natural or legal person. The investor can be both a resident and a non-resident. The annual financial statements, consisting of the balance sheet, profit and loss account and annual report, must be approved by the shareholders within 6 months of the end of the financial year.


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