Quasi partner

From CEOpedia | Management online

Quasi partners are the shareholders in quasi-partnership companies. Their interest in companies lies in the following areas (D. Milman 1999, P.45):

  1. Employment and participation, given their direct involvement.
  2. Maintenance the ‘’status-quo’’ to protect the basis on which the company was set up.
  3. Proper conduction of the company’s affairs.
  4. Their financial position, taking in consideration their personal resources invested in the company.

Quasi partnership

Quasi-partnership company does not have a legally defined term. Main characteristics of those companies are the following (S. McLaughlin 2015, P.45):

  • Establishment with partnership expectations, especially the ones allowing all the owners to participate in management.
  • They are being run by the owners like it were a partnership, for example allowing all owners to take part in management.

In general a quasi-partnership means a company in which there is a relationship of mutual trust between the shareholders, similar to the one between the members of partnership (J. Birds 2010, P. 1161). The quasi-partnership businesses are partnerships in their very substance but they exist in the form of limited companies. They are typically small, private companies, formed on the personal relationship’s basis. Members have mutual confidence and understanding in others shareholders (S. Sime 2016, P.168). There may be an agreement that some or all of the shareholders are to take part in the conduction of the business. They will be financially and personally committed to the company (D. Milman 1999, P.45).

In order for a company to be categorized as a quasi-partnership, following matters are relevant (S. Sime 2016, P.169):

  • Restrictions in share transfers may result from expressing provision of shareholders’ agreement.
  • The number of shareholders is important, but not determinant. In general, the smaller the number, the more likely the company is a quasi-partnership.
  • Changes in the membership or company's ethos may change.
  • A member who at first was not a quasi-partner may become one at later stage. One may be gifted shares in existing company.
  • Equal shareholding is characteristic for quasi-partnership, yet it is not determinative.
  • All the members playing role in the management points towards a quasi-partnership. It is possible for shareholders in form of limited companies to be quasi-partners.

Examples of Quasi partner

  • Owners: Quasi partners may be the owners of the company, who have invested their own funds, or those of other shareholders, into the company to gain a financial benefit. These owners may be individuals, families, or corporations, who can be actively involved in the day-to-day operations of the company.
  • Investors: Quasi partners may also be investors, who have purchased shares in the company and are expecting a return on their investment. These investors may be individuals, family funds, venture capital firms, or even financial institutions.
  • Creditors: Quasi partners may also be creditors, who have loaned funds to the company, either in the form of debt or equity. These creditors may be banks, other financial institutions, or even other shareholders.
  • Directors: Quasi partners may also be directors of the company. These directors may be appointed by the owners, investors, or creditors, and are responsible for overseeing the operations of the company and ensuring that it complies with all applicable laws and regulations.
  • Employees: Quasi partners may also be employees of the company, who are responsible for carrying out the day-to-day operations of the company. These employees may be salaried or hourly, and may be responsible for a variety of tasks, from sales and marketing to accounting and finance.

Advantages of Quasi partner

A quasi partner is an individual who has invested into a quasi-partnership company and who, as a result, has a vested interest in the company’s success. The advantages of being a quasi partner include:

  • Ownership of the company: Quasi partners are the shareholders of the company, meaning they have a say in the company's policies and activities.
  • Profit sharing: Quasi partners are entitled to share in the profits of the company.
  • Asset protection: Quasi partners are protected from any personal liability in the event of the company's bankruptcy.
  • Tax benefits: Quasi partners are entitled to take advantage of certain tax benefits, such as deductions for business expenses.
  • Investment opportunities: Quasi partners may have access to lucrative investment opportunities, such as the ability to purchase additional shares in the company.
  • Ability to influence change: Quasi partners are able to influence the direction of the company by voting on key decisions.
  • Access to professional advice: Quasi partners have access to professional advice from the company's directors and advisors.

Limitations of Quasi partner

A quasi partner's interest in a company is generally limited by several factors. These include:

  • Limited Management Authority - Quasi partners lack the full authority to make major decisions. They can only advise and make recommendations to the company's board of directors.
  • Limited Voting Rights - Quasi partners don't have the same voting rights as full shareholders, and they don't have the same say in the company's decision-making process.
  • Limited Liability - Quasi partners are not personally liable for the debts of the company, and they cannot be held liable if the company goes bankrupt.
  • Limited Financial Obligation - Quasi partners are not responsible for the company's financial obligations, and they are not required to make any capital contributions.
  • Limited Profit Sharing - Quasi partners don't receive profits from the company, and they don't have any claim to any profits the company may generate.
  • Limited Asset Ownership - Quasi partners don't own any of the company's assets, and they don't have any claim to any of the company's assets.

Other approaches related to Quasi partner

Quasi partners have a variety of interests in companies, which are explored in the following points:

  • Maintaining control of their investments and the way their funds are used. Quasi partners have an interest in making sure their funds are used in a way that maximizes their financial returns, as well as any other interests they may have in the company, such as its reputation or strategic goals.
  • Activation of the company's resources. Quasi partners are interested in ensuring that the company has the resources it needs to be successful, such as financial resources, personnel, and other necessary capital.
  • Participating in the decision-making process. Quasi partners want to be involved in the decision-making process of the company, and they want to ensure that their interests are taken into consideration when making decisions.
  • Developing and implementing strategies. Quasi partners are interested in making sure that the company has an effective strategy in place, as well as being involved in the development and implementation of that strategy.
  • Monitoring the performance of the company. Quasi partners have an interest in monitoring the company's performance and taking steps to ensure that the company remains successful.

In summary, quasi partners have a variety of interests in companies, including maintaining control over their investments, activating the company's resources, participating in the decision-making process, developing and implementing strategies, and monitoring the company's performance.


Quasi partner — recommended articles
Nominee director — Limited partnership — Nominee shareholder — Entity theory — Corporate trustee — Powers of directors — Shadow director — Controlled company — Anglo-Saxon model of corporate governance

References

Author: Karolina Liskiewicz

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