Law
Private legal persons
Public limited companies / Open corporations
Crowd funding
Founder
Shareholder: they all bought a piece of the apple. That makes them co-owners. They will never
lose more than they spent on the shares
CEO
All the money of the shareholders are protected behind a huge “fence”.
Private limited companies / Closed corporations
The company is a separate (new born) entity, and come with his own piggy bank
Great advantage: limited liability: Separate assets: if you lose one you still have the other
Capital divided in shares (parts of the company). Shares are not freely tradable, they are named
Another advantage: you pay company tax: after certain break-even point you pay less tax
compared to the income tax you would pay as sole proprietor
You can build huge corporations with more than 1 PLT
Mother or holding company: holds money for owners (retirement funds, real estate) and owns the
daughter companies:
tax advantages
limits financial risk for owners
Daughters or work companies:
daily and by nature risky operations
limits risks: if 1 part of the company fails, the other parts still continue
This construction basically limits the financial liability and protects the company maximize profit
and guarantee continuation
if one of the companies goes bankrupt, the mother may lose her shares but still owns the assets.
the other working companies still continue
Structure of a corporation
Shareholders: they own shares/stocks: so, they own the company
The General Shareholders Meeting represents all of them
A supervisory board, chosen by shareholders, keeps an eye on management and CEO, looks out for
interest of shareholders
Eyes & ears
Chief executive officer or managing director he’s the ‘(WO)MAN’, heart and soul of the company,
services and reports to board of directors
,An executive board, they control the operation of the business on a daily bases, chief managers’
report to CEO, in case of bad management they are personally liable!
Hands & feet – lead the company
Board of directors
Supervisory + executive board
The two boards can also join in one board of directors with executive and nonexecutive members
Split up: two tiers
Board of directors is divided in 2 organs: management board and supervisory board
All in one board of directors: one tier board
Board of directors is 1 organ divided in executive directors/management board and non-
executive directors/supervisory board
The board is chosen by/appointed by the general shareholders meeting
The CEO is the main woman/man of the company, the face of the company and communicator
between the stakeholders
Corporate Governance
A set of relationships between a company’s management, board, shareholders, and other
stakeholders, which provides the structure through which the objectives of the company are set.
Furthermore, it provides the means of attaining and monitoring performance against those
objectives:
CREATING A SYSTEM OF TRANSPARENCY, ACCOUNTIBILITY AND POWERBALANCE AND
MONITORING THAT SYSTEM
The general meeting of shareholders: the owners that DON’T RUN the business (unless they are
also in the board) but they have:
• Decision making rights
- Change articles of association
- Change of company structure/transformation
- Increase/Reduction of capital
- Distribution of profits
- Approval of certain transactions
• Right to dividend
• Right to info (year balance)
• Right to request an extraordinary GM
• Right to place items on the agenda of the GM
• Buy-out clauses
• Right to appoint and remove company directors/supervisors
• Right to ask questions
Powers and duties of the Management Board: they are the RUNNERS of the business, have to
report to CEO, CEO reports to board of directors (meaning shareholders=owners eventually)
• Day to Day management
• Representation of the company (art. 129;130;239;240 of Book2 Dutch Civil code BW)
• Annual accounts
, • Annual reports
• Corporate governance also means:
*the members of the MB are personally responsible for any deficit if the bankruptcy is caused to an
appreciable extent, by the apparent NEGLIGENCE of the management board during the period of
three years prior to the date of the bankruptcy
Advantages of a big corporation
Separate legal personality
Limited liability: separation of assets
Separation between ownership and control
Transferable ownership: even easier with public limited where shares are freely tradable
Continued life: company doesn’t depend on one or two persons
External funding: you can issue shares and get cash
More expansion potential: because all of the above, less risky, better in continuation, more
funding
Disadvantages of a big corporation
Formation/incorporation: complicated, especially a public limited is bound by strict laws and
formation requirements. Also you need a significant capital to start a PLC: public limited company
(Netherlands € 45.0000)
Separation between ownership and control(management) costs are higher because the
shareholders are the owners but they don’t manage the company.
Bigger, more bureaucratic so less flexible. It takes much longer to take a decision in a PLC than in
a sole proprietorship.
Operational forms
Hotel management contract
You can be the owner + GM of this hotel: all is yours
You can be the owner and rent the place out, you only own the building and have nothing to do
with profit/operations
You can be the owner and hire a professional company to exploit the hotel for you. You pay them
and you share the profit: a management contract. You own the hotel (real estate, inventory and
all) but you don’t manage the hotel
Examples Hilton, Starwood, Marriott, Hyatt, IHG
Management contract
There are many forms of management contracts, it is not a particular contract and parties can
stipulate in any way they want
It varies from just getting a GM and use of a chains name and reservation system to an extended
management team that operates your hotel overall
Also there are a million ways to pay for the management: most common is to pay a fixed
percentage of the revenue combined with an incentive fee based on the gross profit. So the
better they manage the more they earn
Franchising
You are the owner and you exploit or want to exploit the hotel
Maybe you feel a little bit small on your own
You can pay a fee to use the name, business plan and resources of a large and known company.
Private legal persons
Public limited companies / Open corporations
Crowd funding
Founder
Shareholder: they all bought a piece of the apple. That makes them co-owners. They will never
lose more than they spent on the shares
CEO
All the money of the shareholders are protected behind a huge “fence”.
Private limited companies / Closed corporations
The company is a separate (new born) entity, and come with his own piggy bank
Great advantage: limited liability: Separate assets: if you lose one you still have the other
Capital divided in shares (parts of the company). Shares are not freely tradable, they are named
Another advantage: you pay company tax: after certain break-even point you pay less tax
compared to the income tax you would pay as sole proprietor
You can build huge corporations with more than 1 PLT
Mother or holding company: holds money for owners (retirement funds, real estate) and owns the
daughter companies:
tax advantages
limits financial risk for owners
Daughters or work companies:
daily and by nature risky operations
limits risks: if 1 part of the company fails, the other parts still continue
This construction basically limits the financial liability and protects the company maximize profit
and guarantee continuation
if one of the companies goes bankrupt, the mother may lose her shares but still owns the assets.
the other working companies still continue
Structure of a corporation
Shareholders: they own shares/stocks: so, they own the company
The General Shareholders Meeting represents all of them
A supervisory board, chosen by shareholders, keeps an eye on management and CEO, looks out for
interest of shareholders
Eyes & ears
Chief executive officer or managing director he’s the ‘(WO)MAN’, heart and soul of the company,
services and reports to board of directors
,An executive board, they control the operation of the business on a daily bases, chief managers’
report to CEO, in case of bad management they are personally liable!
Hands & feet – lead the company
Board of directors
Supervisory + executive board
The two boards can also join in one board of directors with executive and nonexecutive members
Split up: two tiers
Board of directors is divided in 2 organs: management board and supervisory board
All in one board of directors: one tier board
Board of directors is 1 organ divided in executive directors/management board and non-
executive directors/supervisory board
The board is chosen by/appointed by the general shareholders meeting
The CEO is the main woman/man of the company, the face of the company and communicator
between the stakeholders
Corporate Governance
A set of relationships between a company’s management, board, shareholders, and other
stakeholders, which provides the structure through which the objectives of the company are set.
Furthermore, it provides the means of attaining and monitoring performance against those
objectives:
CREATING A SYSTEM OF TRANSPARENCY, ACCOUNTIBILITY AND POWERBALANCE AND
MONITORING THAT SYSTEM
The general meeting of shareholders: the owners that DON’T RUN the business (unless they are
also in the board) but they have:
• Decision making rights
- Change articles of association
- Change of company structure/transformation
- Increase/Reduction of capital
- Distribution of profits
- Approval of certain transactions
• Right to dividend
• Right to info (year balance)
• Right to request an extraordinary GM
• Right to place items on the agenda of the GM
• Buy-out clauses
• Right to appoint and remove company directors/supervisors
• Right to ask questions
Powers and duties of the Management Board: they are the RUNNERS of the business, have to
report to CEO, CEO reports to board of directors (meaning shareholders=owners eventually)
• Day to Day management
• Representation of the company (art. 129;130;239;240 of Book2 Dutch Civil code BW)
• Annual accounts
, • Annual reports
• Corporate governance also means:
*the members of the MB are personally responsible for any deficit if the bankruptcy is caused to an
appreciable extent, by the apparent NEGLIGENCE of the management board during the period of
three years prior to the date of the bankruptcy
Advantages of a big corporation
Separate legal personality
Limited liability: separation of assets
Separation between ownership and control
Transferable ownership: even easier with public limited where shares are freely tradable
Continued life: company doesn’t depend on one or two persons
External funding: you can issue shares and get cash
More expansion potential: because all of the above, less risky, better in continuation, more
funding
Disadvantages of a big corporation
Formation/incorporation: complicated, especially a public limited is bound by strict laws and
formation requirements. Also you need a significant capital to start a PLC: public limited company
(Netherlands € 45.0000)
Separation between ownership and control(management) costs are higher because the
shareholders are the owners but they don’t manage the company.
Bigger, more bureaucratic so less flexible. It takes much longer to take a decision in a PLC than in
a sole proprietorship.
Operational forms
Hotel management contract
You can be the owner + GM of this hotel: all is yours
You can be the owner and rent the place out, you only own the building and have nothing to do
with profit/operations
You can be the owner and hire a professional company to exploit the hotel for you. You pay them
and you share the profit: a management contract. You own the hotel (real estate, inventory and
all) but you don’t manage the hotel
Examples Hilton, Starwood, Marriott, Hyatt, IHG
Management contract
There are many forms of management contracts, it is not a particular contract and parties can
stipulate in any way they want
It varies from just getting a GM and use of a chains name and reservation system to an extended
management team that operates your hotel overall
Also there are a million ways to pay for the management: most common is to pay a fixed
percentage of the revenue combined with an incentive fee based on the gross profit. So the
better they manage the more they earn
Franchising
You are the owner and you exploit or want to exploit the hotel
Maybe you feel a little bit small on your own
You can pay a fee to use the name, business plan and resources of a large and known company.
