I'm willing to be convinced different, but I think it would be better if companies had to be owned by a person or people ie that companies can't own companies.
It seems a layer of indirection that is more harmful than useful.
It seems a layer of indirection that is more harmful than useful.
Requiring full disclosure of all ownership stakes, traceable back to individuals, is probably a better route for this.
And it seems that there's a trend towards that, last company I registered had a new process for listing beneficial ownership of all significant amounts. Just need to push that legislation further.
What do you see as the problem?
Technically I own the fund, and the fund owns the companies. As I understand your comment, this would be disallowed.
You can allow mutual funds or ETFs or whatever similar instrument, but they should not be allowed to have a vote or say in the company.
These don't seem difficult problems to me.
Full public disclosure of all beneficial ownership in entities would go a lot further, IMHO.
I think your full disclosure is actually fundamentally the same as my proposal.
If companies can't own companies, then instead I have to directly transfer ownership over the subsidiary to the shareholders of the primary company. That means they can sell their shares of the foreign subsidiary independently of the headquarters, and the two companies' ownership will diverge over time. I am effectively forced to IPO the foreign subsidiary at the moment of their creation.
You can't assign ownership to the current CEO or board members, because that creates a conflict of interest. They'd be able to take a US company they manage and turn it into a foreign subsidiary they own.
This would also make joint ventures, mergers, and acquisitions far more difficult and complicated, if not impossible.
That sounds fine to me. They're different companies. Why shouldn't I be able to sell my shares in Amazon UK while keeping them in Amazon France?
Or countries could come to some agreement on cross country companies.
Your last paragraph is pretty meaninglessness. In all those circumstances two companies just become one.
should other companies wish to buy your company, they could still buy all the assets of your company, but not the company itself.
Edit: sorry, that was very abrupt! Nice to have your input. I would be interested to hear what you think would be problematic about the Idea.
Also as with all corporate law questions, <other jurisdiction> allows it, so we'll just go there instead.
I'll try to stick to one thought at a time.
We limit liability for risky ventures for a reason.
Because the investor class had the political powers to get that protection written into law for themselves, so as to externalize risks while privatizing rewards.
Would you rather the only entity with a monopoly on violence be liable for all risky ventures? What happens when the government has a very different ideology and goals than what you support?
Again, there is a reason the status quo of private capital doing risky business with limited liability tends to work better.
You don’t have to like it.
Otherwise the liability wouldn't be limited. You'd have to pay all your debts.
I agree. That was not the point I was making.
The government interferes here for good reason, as no one would start a business if they would be personally responsible for random things. The LL in LLC is Limited Liability. Most governments want to make it easy to start a business.
This is the status quo because it has been consistently better than the government doing everything and being liable for everything. With private companies, you have various branches of the government with some ability to correct or regulate matters when a private entity is liable or responsible for something.
In the alternative scenario, when something goes wrong and the government is liable, good luck getting the government to find itself liable.
People started businesses for a very long time before limited liability existed. Heck, people continue to start businesses as general partnerships and sole proprietorships to this day, despite the fact that those forms do not feature limited liabiity, centuries after limited liability was first applied to some business forms. So, “no one would start a business if they would be personally responsible” is very clearly false.
No, that's not even remotely true; private investment in business ventures with risk long predates limited liability being attached to the corporate form. (In fact, it was the success the capitalist class achieved without that protection that enabled them to acquire the political power to get limited liability attached to the corporate form.)
Here you go - https://en.wikipedia.org/wiki/Bottomry
Having an LLC doesn't get you much special protection. You could make equivalent contracts with some assets securing the loan and other assets not securing the loan. The main purpose of the LLC framework is to standardize the whole thing.
No, voluntary lending is not the only way that corporations acquire liabilities, either now or at the time of limited liability was attached to the form. For instance, tort liability is a thing.