📚 node [[limited liability company]]

Hybrid of corporation and limited partnership

Angel investors are interested in such setups , due to potential tax reductions . VC prefer to buy shares from a corporations , rather than purchasing the memberships in LLC

Advantages

  1. No liability ( personal assets are safe ) , unless one acted in an illegal , unethical or irresponsible manner while carrying out the company activities
  2. Ownership can be separated into classes - opens up more means of raising [[Equity]] financing
  3. Doesn't require a board and compulsory meetings with minutes being recorded

LLC does not issue stocks

If one wants to issue stocks, they have to become a [[Corporation]]

Even though we might call members as shareholders , there is no share to trade

Disadvantage

  1. Lack of shares
  2. Memberships can't be transferred easily like shares
  3. The company might have to dissolve when a member leaves

Special Type

Public

  • Trades in the stock exchange
  • Full disclosure of financials
  • Tightly regulated
  • No limit to number of shareholders
  • Full liquidity , easily transferable shares at their discretion

Disadvantage :

  • If any violation or dispute arises , founding owner might lose control over business

Private

  • Not publicly traded , hence not strictly regulated
  • Maximum shareholders - 50
  • Not as liquid as public limited
  • Capital growth is not as good as the public counterpart
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