Podcast
Questions and Answers
What is the purpose of the CFA Institute publication mentioned?
What is the purpose of the CFA Institute publication mentioned?
Which of the following statements is true regarding the CFA Institute trademarks?
Which of the following statements is true regarding the CFA Institute trademarks?
What should individuals seek if they require expert assistance?
What should individuals seek if they require expert assistance?
What is the ISBN for the paper edition of the publication?
What is the ISBN for the paper edition of the publication?
Signup and view all the answers
What does the CFA Institute publication disclaim about the services it provides?
What does the CFA Institute publication disclaim about the services it provides?
Signup and view all the answers
What is a key characteristic of a sole trader?
What is a key characteristic of a sole trader?
Signup and view all the answers
Which organizational form typically provides ownership separation between managers and owners?
Which organizational form typically provides ownership separation between managers and owners?
Signup and view all the answers
What does owner/shareholder liability refer to in corporate issuers?
What does owner/shareholder liability refer to in corporate issuers?
Signup and view all the answers
What distinguishes publicly held companies from privately held companies?
What distinguishes publicly held companies from privately held companies?
Signup and view all the answers
Which of the following is a disadvantage of partnerships?
Which of the following is a disadvantage of partnerships?
Signup and view all the answers
What percentage of share ownership did the Meyers Family hold as of 31 December 2021?
What percentage of share ownership did the Meyers Family hold as of 31 December 2021?
Signup and view all the answers
What is the purpose of an exchange listing for shares?
What is the purpose of an exchange listing for shares?
Signup and view all the answers
Which entity owned 23% of the shares as of the end of 2021?
Which entity owned 23% of the shares as of the end of 2021?
Signup and view all the answers
How can investors track the value changes of a company's shares?
How can investors track the value changes of a company's shares?
Signup and view all the answers
If a company shares trade infrequently, what can be expected when trying to sell a large number of shares?
If a company shares trade infrequently, what can be expected when trying to sell a large number of shares?
Signup and view all the answers
What causes double taxation in the context of corporate income?
What causes double taxation in the context of corporate income?
Signup and view all the answers
Which factor would likely discourage shareholders from distributing profits?
Which factor would likely discourage shareholders from distributing profits?
Signup and view all the answers
If Auchan were organized as a limited partnership, how much tax would be paid at the personal level on its pre-tax profit of €838 million?
If Auchan were organized as a limited partnership, how much tax would be paid at the personal level on its pre-tax profit of €838 million?
Signup and view all the answers
How much more tax would Auchan pay in its corporate form compared to a limited partnership?
How much more tax would Auchan pay in its corporate form compared to a limited partnership?
Signup and view all the answers
Which statement about corporate issuers is incorrect?
Which statement about corporate issuers is incorrect?
Signup and view all the answers
What is a potential consequence of high taxes on shareholders' dividend income?
What is a potential consequence of high taxes on shareholders' dividend income?
Signup and view all the answers
What tax rate is applied to Auchan’s pre-tax profits at the corporate level?
What tax rate is applied to Auchan’s pre-tax profits at the corporate level?
Signup and view all the answers
If Auchan were a limited partnership, what would happen to the tax burden related to distributions?
If Auchan were a limited partnership, what would happen to the tax burden related to distributions?
Signup and view all the answers
Which of the following is a typical characteristic of public companies?
Which of the following is a typical characteristic of public companies?
Signup and view all the answers
What is a common requirement that both public and private companies must meet concerning their shares?
What is a common requirement that both public and private companies must meet concerning their shares?
Signup and view all the answers
In the context of private companies, which of the following statements is true?
In the context of private companies, which of the following statements is true?
Signup and view all the answers
What distinguishes public companies from private companies?
What distinguishes public companies from private companies?
Signup and view all the answers
Which of the following best describes a key feature of a private company's stock trading?
Which of the following best describes a key feature of a private company's stock trading?
Signup and view all the answers
What distinguishes public company shares from private company shares in terms of market trading?
What distinguishes public company shares from private company shares in terms of market trading?
Signup and view all the answers
In what way do private investors typically engage with private companies compared to public companies?
In what way do private investors typically engage with private companies compared to public companies?
Signup and view all the answers
What is a key feature of financing in the primary market for private companies?
What is a key feature of financing in the primary market for private companies?
Signup and view all the answers
What does Exhibit 12 illustrate about public companies?
What does Exhibit 12 illustrate about public companies?
Signup and view all the answers
What aspect of private placements differs between public and private companies?
What aspect of private placements differs between public and private companies?
Signup and view all the answers
How does the sum of financing typically compare between public and private companies?
How does the sum of financing typically compare between public and private companies?
Signup and view all the answers
What is a common expectation about the holding period for investors in private companies?
What is a common expectation about the holding period for investors in private companies?
Signup and view all the answers
Which of the following statements is true about the nature of public issuers?
Which of the following statements is true about the nature of public issuers?
Signup and view all the answers
Signup and view all the answers
Study Notes
Corporate Issuers: Study Notes
-
Organizational Forms: Businesses can be organized as sole traders, partnerships, or limited companies.
- Sole Trader/Proprietorship: One owner, owner is personally liable for business debts.
- Partnerships: Two or more owners, owners are personally liable for business debts.
- Limited Companies: Separate legal entity from owners, owners (shareholders) have limited liability.
-
Key Features of Corporate Issuers:
- Legal Identity: Corporations are separate legal entities from their owners.
- Owner-Manager Separation: Owners (shareholders) are often separate from managers.
- Owner/Shareholder Liability: Limited liability protects shareholders from personal liability beyond their investment.
- External Financing: Corporations can raise capital through various means, like issuing stocks.
- Taxation: Corporate income is taxed, and dividends are also taxed at the shareholder level (double taxation).
-
Publicly vs. Privately Held Companies:
-
Public Companies: Issued shares trade on exchanges, more readily transferred, price transparency, larger amounts of financing
- Share Issuance: Issued shares can be traded in the secondary market, greater funding access.
- Exchange Listing: This allows easy transfer, liquidity, and price transparency
- Typical Entity Relationships: There are mandated disclosures and registration to the regulator for trading.
-
Private Companies: Shares are not publicly traded, often involving private placements, fewer investors, longer holding periods, and smaller amounts of financing.
- Share Issuance: Shares may be purchased through private placements.
- Typical Entity Relationships: Disclosure requirements are less strict than public companies.
-
Public Companies: Issued shares trade on exchanges, more readily transferred, price transparency, larger amounts of financing
-
Tax Disadvantage of Corporate Form:
- Double taxation (corporate and personal) reduces after-tax profit compared to a pass-through entity like a limited partnership.
-
Key Differences Between Public and Private Companies (Example):
-
Auchan Holding: A corporation with €838 million in pre-tax profit, €251.4 million in total tax if all profits were distributed.
- This tax liability would reduce by €184.8 million if it were structured as a partnership.
-
Auchan Holding: A corporation with €838 million in pre-tax profit, €251.4 million in total tax if all profits were distributed.
-
Knowledge Check (Question 1):
- Match company characteristics to categories (publicly held, privately held, both).
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
This quiz covers the essential concepts of corporate issuers, including organizational forms, key features, and the implications of limited liability. Learn about sole traders, partnerships, and limited companies, along with their legal identities and external financing methods. Prepare to test your understanding of these vital business structures.
