Structures 2 Flashcards
(20 cards)
What role does entrepreneurship play in production?
It combines other factors to generate profit.
How does business law support collective economic activity?
It regulates the relationships between individuals combining resources.
What is a market failure?
A situation where market outcomes are inefficient or unfair
What is a moral hazard in business?
When decision-makers take risks they don’t personally bear.
What is the principal-agent problem?
A conflict where agents (e.g. employees) don’t act in the best interests of principals (e.g. owners).
What is the main regulatory concern with sole traders?
There is no separation of personal and business assets.
How are ownership and management related in sole trading?
They are not separated; the same person owns and manages the business.
Can sole traders take advantage of corporate tax rates?
No
What are intangible assets in business?
Non-physical assets like goodwill or intellectual property.
What is the main benefit of a partnership in terms of regulation?
Minimal legal formalities and registration requirements.
Why is liquidity an issue in partnerships?
Transferring membership requires consent of other partners.
How does the law view partnership property?
It may be jointly owned or individually held
What is entity shielding in the context of companies?
Protection of company assets from personal creditors of shareholders.
What case established separate legal personality for companies?
Salomon v Salomon (1897).
What does “perpetual existence” mean for companies?
They continue regardless of changes in ownership.
Why might public disclosure be a disadvantage for companies?
It reduces confidentiality in internal matters.
What is the minimum share capital for a PLC?
EUR 25
Who is responsible for registering a company?
The founders
How are shares transferred in a company?
Freely
What type of business form offers the highest regulatory formality?
Companies.
