Insr & Risk mgmt 441
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Describe, in an insurance context, why the form of ownership is important.
The form of ownership is importaint in an insurance context bc it affects the insurability of the business and it determines, to some extent, exactly how the named insured should be identifies on the policy.
Describe the advantage of a corportation
it limits the owners' liability for the corporations' contracts and torts.
Describe the advan. of a partnership
income flows to each partner and is taxable at that individual's rate, rather than at a rate that would apply to a corporation.
Describe the advantage of a joint venture
it can be formed quickly, and participants can pool resources in order to pre-empt competitors while sharing the risks of an undertaking.
Describe the advan. of a limited liability company (LLC)
it provides its owners the limited liability of a corporation and the tax advantages of a partnership.
Describe the advan. of an unincorporated association:
it can be easily formed and is not subject to many of the taxes commonly levided on corporations.
Explain how corporations and unincorporated associations are similar and how they differ.
Corporations and unincorporated associations are similiar in that they can be both for-profit and not-for-profit. However, bc an unincorporated association is not a legal entity like a corpoartion, its members can be held indiv. liable for the association's activites.
Adele owns Atley Health Products, a california-based-company that promoste environmental friendly mamnufacturing and distribution of natural herb products. Rafeal owns a similiar company in Chile. Adele and Rafeal are considering building a third company in Chile that promotes a similar natural philosophy. However, they plan to seel the company after the byuilding is complete. Explain what type of ownership A and R should consider and why, based on the facts presented.
A and D should consider forming a joint venture when cuilding their overseas company. A joint venture will fulfill their desire to dissolve the relationship after the building is sold to another investor. Joint ventures are also often used as an expedited means to enter new markets, especially foreign markets.
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