Gorvernance Of Comercial Companies

Separation of ownership & control
• Until 16th century businesses were mainly run by owners (eg. Sole proprietors - craftsmen): small & specialized. • However they started gradually developing, covering new fields of business, and cumulating more capital. • In effect they became a form of investment by (enough) reach people.
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Separation ofownership & control
Why is there a separation between ownership & control? • Companies are large and need capital that can be brought by more than a few owners (eg. public companies are owned by hundreds of thousands of investors). Daily decisions cannot be taken by such a huge number of owners – they need a representation. • Most shareholders don’t wish to take part in a firm’s business. • Mostindividual investors are passive – they are interested in risk & return. • In order to diversify risk investors build their portfolios with stocks of many firms. In consequence firms are controlled by managers (officers or executives) and owned by shareholders. template from www.brainybetty.com Free 24

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Separation of ownership & control
Is a separation of ownership & control aproblem? • Why would managers care about the owners? • If shareholders cannot effectively monitor tha managers’ behavior, then managers may be tempted to use the firm’s assets for their own ends, all at the expense of the shareholders (principal – agent problem). • There are many examples of corporate perks: corporate jets, private security, residences, financial, tax & legal assistance, health & lifeinsurance etc. • Some managers tend to overinvest (in order to make more power, to build a „greater kingdom”). It all costs…
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Separation of ownership & control
Who watches the executives? • Board of directors (US) or supervisory board (Europe) What if investors are passive? How to make sure that boards make good job? • incentives formanagers: to tie the wealth of executives to the wealth of shareholders so they have the same aim. Remuneration tools: stocks, restricted stocks, stock options • monitoring: boards, board committees, independent auditors, quarter and annular reports.
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Types of partnerships & companies
• Partnerships regulated by Civil Code (spółki cywilne) •Commercial companies (regulated by Code of Commercial Partnerships & Companies):
– Private companies:
• • • • A registered partnership (spółka jawna) A professional partnership (spółka partnerska) A limited partnership (spółka komandytowa) A limited joint-stock partnership (spółka komandytowo-akcyjna)

– Incorporated companies:
• A limited company (spółka z ograniczoną odpowiedzialnością) • Ajoint-stock company (spółka akcyjna)
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Types of partnerships & companies
Partnerships & companies Civil partnerships Commercial companies

Private companies

Incorporated companies

Registered partnership

Limited company

Professional partnership

Joint-stock company

Limited partnership

Limited joint-stock partnership

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General atributes of partnership/company
• Set-up on the basis of an agreement or company charter • (Business) aims • Capital paid-up by partners/shareholders (money or assets in kind) • Assets & liabilities • Profits or losses
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Registered partnership (spółka jawna) – rights & obligations ofpartners
• All partners are liable towards the partnership’s creditors with no limits. This also refers to the private assets of partners. • Unless the partnership agreement includes exceptions, each partner has a right to represent the partnership. • Each partner always has a personal right to information about the financial situation of the partnership & its interests as well as a right to...