Company Forms

(and development over time)

legal forms (British, American and Austrian)

setting up a limited company

advantages and disadvantages of company forms

company evolution (ex. Harley Davidson)

ownership and control of corporations (and how it is related to the current economic crisis)

Roger Frank Margaret $50,000 $15,000 $35,000

RFM Ltd.

The company has a starting capital of _______________.

Roger Frank Margaret $50,000 $15,000 $35,000

RFM Ltd.

The company has a starting capital of $100,000.

Roger Frank Margaret $50,000 $15,000 $35,000

RFM Ltd.

The company issues __________ shares, each one with a

nominal value (or "face value" or "par value") of $100.

Roger Frank Margaret $50,000 $15,000 $35,000

RFM Ltd.

The company issues 1000 shares, each one with a

nominal value (or "face value" or "par value") of $100.

Roger Frank Margaret $50,000 $15,000 $35,000

RFM Ltd.

Roger has _________ shares or a ________ % stake (or "holding").

How many more shares would he need to be the majority

shareholder and to have controlling interest? ______________

Roger Frank Margaret $50,000 $15,000 $35,000

RFM Ltd.

Roger has 500 shares or a 50 % stake (or "holding").

How many more shares would he need to be the majority

shareholder and to have controlling interest? one

Roger Frank Margaret $50,000 $15,000 $35,000

RFM Ltd.

RFM Ltd. makes a profit of $2000 in the first year. What is

the dividend per share? __________________

Roger Frank Margaret $50,000 $15,000 $35,000

RFM Ltd.

RFM Ltd. makes a profit of $2000 in the first year. What is

the dividend per share? $2

#4 Advantages and Disadvantages

Advantages Disadvantages

Sole Proprietorship

Partnership

Private Limited Company (Ltd.)

Public Limited Company (plc.)

#4 Advantages and Disadvantages

Advantages Disadvantages

Sole Proprietorship

2, 6, 19 17, 20, 22

Partnership

Private Limited Company (Ltd.)

Public Limited Company (plc.)

#4 Advantages and Disadvantages

Advantages Disadvantages

Sole Proprietorship

2, 6, 19 17, 20, 22

Partnership 8, 10, 21 3, 9, 12(13, 20)

Private Limited Company (Ltd.)

Public Limited Company (plc.)

#4 Advantages and Disadvantages

Advantages Disadvantages

Sole Proprietorship

2, 6, 19 17, 20, 22

Partnership 8, 10, 21 3, 9, 12(13, 20)

Private Limited Company (Ltd.)

1, 5, 23(10)

4, 13, 24

Public Limited Company (plc.)

#4 Advantages and Disadvantages

Advantages Disadvantages

Sole Proprietorship

2, 6, 19 17, 20, 22

Partnership 8, 10, 21 3, 9, 12(13, 20)

Private Limited Company (Ltd.)

1, 5, 23(10)

4, 13, 24

Public Limited Company (plc.)

11, 14, 16(5)

7, 15, 18

American and Austrian Company Forms

Company types differ mainly in the following points:

• Liability - of owners, partners, shareholders, or "members"

• Taxation - does the company or do the owners pay taxes (= "pass through taxation")

• Legal status (as "legal person" or not?) in Austria this is the basic difference between "Personen- oder

Kapitalgesellschaft")

• Ownership and control (combined or separated?)

American Companies

A) Sole Proprietorship

B) (General) Partnership(two or more general partners with unlimited liability)

Limited (Liability) Partnership ("LLP")(one or more general partners with unlimited liability,

one or more silent partners with limited liability)

C) Limited Liability Corporation ("LLC") a new hybrid form between partnerships and corporations – basically

any variant of liability and taxation can be chosen by owners

American CompaniesD) Corporations (abbr. - “INC.”)

Close (or “Closely Held”) Corporation• maximum number of shareholders (differs

from state to state - often 30), shares not traded publicly• constitutes a new legal person• not technnically an official company form

Public Corporation (S or C)• separation of ownership (shareholders) and control (management: president or CEO - “chief executive officer” - vice-president(s) . . . )• S = "pass through" taxation, C = the company pays taxes

Austrian Companies

Below are the abbreviations of the most common Austrian forms of companies. Identify them and say which type of American or English company they are most similar to.

GesBR

OG (OEG)

(EEG)KG (KEG)

SE

GmbHAGGmbH & Co KG

For a good English explanation of these company forms, see: http://www.aba.gv.at/en/pages/C3F42-AB167.html and click on "Starting a Business in Austria"

Approximate Equivalents (US – Austria):

Sole proprietorship

General Partnership

Limited Partnership

Limited Liability Partnership (LLP)

Limited Liability Corporation (LLC)

Closed (closely-held) Corporation(British: Private Limited Company – ltd)

Public Corporation(British: Public Limited Company – plc)

GesbR, EEG, OG

KG, GesmbH+Co KG

(GesmbH+Co KG?)

-

GmbH, AG (small)

AG (large)

Harley Davidson

Harley Davidson

Development of Harley-Davidson

• 1903 – Foundation by 3 owners (Partnership) Later 4th partner joins.

• 1907 – "Harley-Davidson Motor Company is incorporated on September 17th. The

stock is split four ways between the four founders." (closely-held corporation)

• 1965 – Stocks offered to public (Public Corporation)

• 1969 - Merger with (takeover by?) AMF (Public Corporation, but also subsidiary of AMF)

• 1981 - 13 executives buy H-D back from AMF in leveraged buyout (Closely-held corporation – 13 shareholders)

• 1985 – Additional shareholders taken on to save company from bankruptcy. (Closely-held corporation)

• 1986 – Second public offering of shares. IPO – Initial Public Offering price is $11 (Public Corporation)

• 1986 – 1999 – Stocks split 5 times – Original 13 investors become multi-millionaires. (Public Corporation)

• 2003 – HD turns 100. Over 300 million shares outstanding, share price approximately $50. (Public Corporation)

• 2009 - financial crisis, share price drops to approximately $12

And today . . .

http://investor.harley-davidson.com/stock-index.cfm