Management and Decision-Making: Essay

Sample Essay

Words 3,167

Who makes the decisions and manages the company or partnership? In a company, it’s usually the directors, who are chosen by the shareholders. A shareholders’ agreement usually describes

  • Who will own how many shares of the company
  • How many directors there will be
  • What decisions the directors can make
  • What is the required number of directors present at a meeting for the company to make a decision

The agreement may list certain decisions, which require special approval of the shareholders (i.e. major expenditures, obtaining loans, selling property etc.).

Unless everyone agrees otherwise, all partners have the right to manage and a simple majority governs decisions. You may prefer to clearly define your roles so that there is less confusion about what your duties are. You may also wish to give one partner the authority to sign contracts on behalf of the partnership or require all partners to sign. This is especially important in arranging bank accounts or financing.

A “limited partnership” is a special form of partnership. A limited partner contributes money while the general partner manages the partnership. The limited partner takes no management role and is only liable for claims against the partnership up to the amount that she has already contributed.

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