Partnership Law and Securities
Brown is not entitled to a higher level of profits than her partner Stratum is. Both individuals accorded varying capital shares, with Brown offering the lesser contribution of $10,000 while Stratum accords $120,000. Additionally, the parties agree to the fact that Brown would compensate her capital deficit by according management services to the company. Generally, LLC laws view management and capital contributions as equal processes since they both work towards the acquisition of the business’ revenues (Alberty, 2005). Therefore, as both are treated as equal contributors within the company, profits should also be spilt within the same basis.
Brown and Stratum’s LLC has employed the management approach that accords supervision responsibilities to them as the only company members (Crane, 2006). Note that, the approach accords equal privileges to both individuals with regard to the management requirement and therefore, had Stratum proposed to award his son a management position paralleling that of Brown, then she bore legal ability to protest against the strategy. Stratum’s son can only be accorded a management position as a third party and this does not accord any powers over Brown, who is a member of the company.
Brown will be entitled to both profit share and capital reimbursement (Ugarkovic, 2007). With the company having a current value of $500, 000, then it translates to a combined profit of $300,000, each member bearing an own share of $150,000, as the capital contributions are termed as equal. The capital should be reimbursed within a period of not less than six months whereas the profits have to be accorded at the stipulated period of twenty-five years upon the clearance of the company’s outstanding expenditures and liabilities.
Upon the withdrawal from the company, Brown is not under any trade obligation from Stratum and she is therefore free to venture into any organization, inclusive of the initial company’s rivals.
The sales of securities can take two major forms with the initial one marked by currency exchange. The general set period for the actual end of the transaction is accorded as three days, the expiry of which leads to the breach of a sale agreement and consequently the absolution of the arrangement. A sale is only achieved once the purchaser is accorded the securities while the seller is accorded the financial dues within the specified trading association (Curley, 2008). Alternatively, the purchaser may opt to accord to the seller other forms of securities. In case of the latter option, the same duration rules are also employed within the association with the actual sale being sealed with the transfer of the assets from both the seller and the purchaser. A notable trend is therefore notable in both approaches, as evidenced by the title exchanges regarding the transmission of ownership from one individual to another.
In context of the accorded situation, Capital General Corporation (CGC) acted as a broker between Amenity Inc. (AI) and Utah Securities Division (USD). Within the 90,000 allocated shares accorded to CGC customers, trading acquaintances and other business links, none of the associations can be termed as a sale since no monetary exchange was accorded within the process. Additionally, there were no title or assets transfers within the dealings, thereby maintaining the allocated shares as AI’s property. With the acquisition bit however, it meant that USD absorbed the securities into their legal ownership, and this is inclusive of the 90,000 component. USD may therefore decide to recall back the allotted amount of shares, or accord an actual sale to the temporal holders. Therefore, the $25,000 dollars accorded to CGC by USD is the broker fee for the sales arrangement.
Alberty, S. C. (2005). Limited Liability Companies: A Planning and Drafting Guide, 2005 Supplement. Philadelphia, PA: ALI-ABA.
Crane, F. (2006). Limited Liability Company for Group Investments. Florence, AL: Zyrus Press.
Curley, M. T. (2008). Margin Trading from A to Z: A Complete Guide to Borrowing, Investing and Regulation. Hoboken, NJ: John Wiley and Sons.
Ugarkovic, M. (2007). Profit Sharing and Company Performance. Stamford, CT: DUV.
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