An Overview of Special Business Groups
Joint Venture:
A joint venture occurs when individuals or businesses combine forces in order to share revenue. Businesses may share intellectual information, funds, market research, and/or products in order to increase their revenue. Joint ventures allow businesses to increase revenue and penetrate markets that they may not be able to reach on their own.
Joint ventures are not traditional partnerships, meaning that they will generally dissolve after a specific business goal has been reached. Reasons for engaging in a joint venture may include: increased profit, access to foreign markets, globalization, and increased strength and recognition. Joint ventures should include a contract that will specify exactly how much is invested by each party, and how and when these investments will be returned. Sometimes when joint ventures occur between different countries, cultural business differences can cause controversy.
Syndicate:
A syndicate is a group of individuals or businesses that come together to accomplish a common business goal. Syndicates will often form when one business does not have enough resources or capital to carry out a specific business transaction. The members will combine resources, and once the business transaction has been completed, the syndication will dissolve.
The companies involved in the syndicate will share the risks and profits of an investment. This often occurs when the cost of an investment is considerably high or risky. Investment companies, banks, and insurance companies will commonly engage in syndicates.
Joint Stock Company:
A joint stock company will offer shares of stock to its members based on the amount of financial contribution they have provided to the company. Joint stock companies are a type of limited liability corporation, meaning that the shareholders will generally not be held liable for any debt that is incurred by the company.
There are generally two types. A private joint stock company will offer shares of stock to the higher up members of the company, such as the owners and managers. Public joint stock companies will offer shares to all the members of the company, as well as sell shares in the open market. Shareholders within a joint stock company are eligible to vote on certain policies within the company, such as the annual budget. They will also receive dividends of the company's profits based on the amount of shares they own, as well as debentures.
Business Trust:
A trust is a legal concept in which property or assets are managed by a trustee for the interests of beneficiaries. This is often seen in estate planning when a person leaves his or her assets in the hands of a trustee who will manage the funds until the beneficiaries reach a certain age. The person who owns the property is called the settler.
A business trust is formed in a similar way. It is when the operation and ownership of a business is entrusted to an appointed trustee. This person does not receive the profits of the business, but will manage the profits until they can be turned over to the beneficiaries. In order to establish a business trust, the organization must prove that it is engaged in legitimate business practices. This can include the buying, selling, and/or manufacturing of products. It can also include investments.
Cooperative:
A cooperative is a special business formation where all members are part owners and own equal shares. Members will elect directors and managers to prepare annual reports and handle the day-to-day business operations.
The International Cooperative Alliance is legislation that governs the specific regulations for running a cooperative. Profits will be invested back into into the business to pay for expenses and the rest will be divided among the members. All members will receive equal compensation.
Membership in a cooperative is completely voluntary, however, the members must be willing to take on the responsibility of being part owner. Housing cooperatives are a common type of this special business form. The organization will buy, or sometimes build, a housing complex and each member will be offered a unit.
