Organizational Forms, Corporate Issuer Features, and Ownership

A sole proprietorship is the simplest form of business, where the owner has full control and unlimited liability. The business is not legally separate from the owner, and profits are taxed as personal income. Access to financing is limited to personal funds and credit.

In a general partnership, two or more owners share control, profits, and unlimited liability. Partnerships can be formed with or without a formal agreement and are pass-through entities for tax purposes.

A limited partnership includes at least one general partner with unlimited liability and one or more limited partners with liability restricted to their investment. Limited partners typically do not manage the business. Profits and losses are shared as per the partnership agreement.

An LLP is a partnership where all partners have limited liability and can participate in management. It is common in professional services and limits the personal risk to the partners.

A private limited company features limited liability for owners, separation of ownership and management, and easier transferability of shares compared to partnerships. It is taxed at the shareholder level if profits are distributed.

A public limited company can have an unlimited number of shareholders, making it ideal for accessing vast capital. It features limited liability, separation of ownership and management, and is subject to double taxation (corporate level and upon dividend distribution).

A corporation is a separate legal entity formed by filing articles of incorporation. It can engage in activities like entering contracts, hiring, and paying taxes, similar to an individual.

Corporations feature a separation between owners (shareholders) and operators (management). Shareholders elect a board of directors who appoint management responsible for the corporation's operations. This separation allows corporations to attract investors who prefer not to manage day-to-day operations.

Shareholders have limited liability, meaning they can only lose their investment in the corporation and are not liable for corporate debts unless they provide personal guarantees.

Corporations can access external financing more easily due to the separation of ownership and management. They can raise funds through equity by selling shares or through debt by issuing bonds, loans, and leases.

Corporations are taxed on their profits, which may differ from financial statement profits due to different tax codes. Shareholders might face double taxation where dividends are taxed at both corporate and personal levels, depending on the jurisdiction.

Public companies are listed on stock exchanges which enhances liquidity and price transparency. This allows for easy transfer of ownership through buy and sell orders. Private companies, however, do not have listed shares, making their ownership transfer more complex and less transparent.

Public companies can issue shares that are traded on the secondary market, providing them with greater access to capital. Private companies typically engage in private placements with more restrictive investor qualifications and longer holding periods.

Public companies face stringent regulatory requirements including regular financial disclosures and compliance checks. Private companies have fewer disclosure obligations, offering more privacy but less transparency for investors.

Private companies can go public through IPOs, direct listings, or acquisitions. Each method has different implications for capital raising, shareholder dilution, and regulatory requirements.

Public companies may go private through buyouts, often financed by debt. This process is typically initiated by investors who believe they can enhance value away from public markets.

Corporate ownership can vary widely from individual and institutional investors to governments and non-profits, each bringing different objectives and influences on company operations.