A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company. In modern-day corporate law, the existence of a joint-stock company is synonymous with incorporation and limited liability. Therefore, joint-stock companies are known as corporations or limited companies; some jurisdictions still provide the possibility of registering joint-stock companies without limited liability. In the United Kingdom and other countries that have adopted its model of company law, they are known as unlimited companies. In the United States, they are known as joint-stock companies. Ownership refers to a large number of privileges; the company is managed on behalf of the shareholders by a board of directors, elected at an annual general meeting. The shareholders vote to accept or reject an annual report and audited set of accounts.
Individual shareholders can sometimes stand for directorships within the company if a vacancy occurs, but, uncommon. The shareholders are liable for any of the company debts that extend beyond the company's ability to pay up to the amount of them. Finding the earliest joint-stock company is a matter of definition; the earliest records of joint stock company can be found in China during the Song Dynasty. Around 1250 in France at Toulouse, 96 shares of the Société des Moulins du Bazacle, or Bazacle Milling Company were traded at a value that depended on the profitability of the mills the society owned, making it the first company of its kind in history; the Swedish company Stora has documented a stock transfer for an eighth of the company as early as 1288. In more recent history, the earliest joint-stock company recognized in England was the Company of Merchant Adventurers to New Lands, chartered in 1553 with 250 shareholders. Muscovy Company, which had a monopoly on trade between Moscow and London, was chartered soon after in 1555.
The much more famous and powerful English East India Company was granted an English Royal Charter by Elizabeth I on December 31, 1600, with the intention of favouring trade privileges in India. The Royal Charter gave the newly created Honourable East India Company a 15-year monopoly on all trade in the East Indies; the Company transformed from a commercial trading venture to one that ruled India and exploited its resources, as it acquired auxiliary governmental and military functions, until its dissolution. Soon afterwards, in 1602, the Dutch East India Company issued shares that were made tradable on the Amsterdam Stock Exchange; that invention enhanced the ability of joint-stock companies to attract capital from investors, as they could now dispose their shares. In 1612, it became the first'corporation' in intercontinental trade with'locked in' capital and limited liability. During the period of colonialism, Europeans the British, trading with the Near East for goods and calico for example, enjoyed spreading the risk of trade over multiple sea voyages.
The joint-stock company became a more viable financial structure than previous guilds or state-regulated companies. The first joint-stock companies to be implemented in the Americas were The London Company and The Plymouth Company. Transferable shares earned positive returns on equity, evidenced by investment in companies like the British East India Company, which used the financing model to manage trade in India. Joint-stock companies paid out divisions to their shareholders by dividing up the profits of the voyage in the proportion of shares held. Divisions were cash, but when working capital was low and detrimental to the survival of the company, divisions were either postponed or paid out in remaining cargo, which could be sold by shareholders for profit. However, in general, incorporation was possible by royal charter or private act, it was limited because of the government's jealous protection of the privileges and advantages thereby granted; as a result of the rapid expansion of capital-intensive enterprises in the course of the Industrial Revolution in Britain, many businesses came to be operated as unincorporated associations or extended partnerships, with large numbers of members.
Membership of such associations was for a short term so their nature was changing. Registration and incorporation of companies, without specific legislation, was introduced by the Joint Stock Companies Act 1844. Companies incorporated under this Act did not have limited liability, but it became common for companies to include a limited liability clause in their internal rules. In the case of Hallett v Dowdall, the English Court of the Exchequer held that such clauses bound people who have notice of them. Four years the Joint Stock Companies Act 1856 provided for limited liability for all joint-stock companies provided, among other things, that they included the word "limited" in their company name; the landmark case of Salomon v A Salomon & Co Ltd established that a company with legal liability, not being a partnership, had a distinct legal personality, separate from that of its individual shareholders. The existence of a corporation requires a special legal framework and body of law that grants the corporation legal personality, it ty
A corporation is an organization a group of people or a company, authorized to act as a single entity and recognized as such in law. Early incorporated entities were established by charter. Most jurisdictions now allow the creation of new corporations through registration. Corporations come in many different types but are divided by the law of the jurisdiction where they are chartered into two kinds: by whether they can issue stock or not, or by whether they are formed to make a profit or not. Corporations can be divided by the number of owners: corporation corporation sole; the subject of this article is a corporation aggregate. A corporation sole is a legal entity consisting of a single incorporated office, occupied by a single natural person. Where local law distinguishes corporations by the ability to issue stock, corporations allowed to do so are referred to as "stock corporations", ownership of the corporation is through stock, owners of stock are referred to as "stockholders" or "shareholders".
Corporations not allowed to issue stock are referred to as "non-stock" corporations. Corporations chartered in regions where they are distinguished by whether they are allowed to be for profit or not are referred to as "for profit" and "not-for-profit" corporations, respectively. There is some overlap between stock/non-stock and for-profit/not-for-profit in that not-for-profit corporations are always non-stock as well. A for-profit corporation is always a stock corporation, but some for-profit corporations may choose to be non-stock. To simplify the explanation, whenever "Stockholder" or "shareholder" is used in the rest of this article to refer to a stock corporation, it is presumed to mean the same as "member" for a non-profit corporation or for a profit, non-stock corporation. Registered corporations have legal personality and their shares are owned by shareholders whose liability is limited to their investment. Shareholders do not actively manage a corporation. In most circumstances, a shareholder may serve as a director or officer of a corporation.
In American English, the word corporation is most used to describe large business corporations. In British English and in the Commonwealth countries, the term company is more used to describe the same sort of entity while the word corporation encompasses all incorporated entities. In American English, the word company can include entities such as partnerships that would not be referred to as companies in British English as they are not a separate legal entity. Late in the 19th century, a new form of company having the limited liability protections of a corporation, the more favorable tax treatment of either a sole proprietorship or partnership was developed. While not a corporation, this new type of entity became attractive as an alternative for corporations not needing to issue stock. In Germany, the organization was referred to as Gesellschaft mit beschränkter Haftung or GmbH. In the last quarter of the 20th Century this new form of non-corporate organization became available in the United States and other countries, was known as the limited liability company or LLC.
Since the GmbH and LLC forms of organization are technically not corporations, they will not be discussed in this article. The word "corporation" derives from corpus, the Latin word for body, or a "body of people". By the time of Justinian, Roman law recognized a range of corporate entities under the names universitas, corpus or collegium; these included the state itself and such private associations as sponsors of a religious cult, burial clubs, political groups, guilds of craftsmen or traders. Such bodies had the right to own property and make contracts, to receive gifts and legacies, to sue and be sued, and, in general, to perform legal acts through representatives. Private associations were granted designated liberties by the emperor. Entities which carried on business and were the subjects of legal rights were found in ancient Rome, the Maurya Empire in ancient India. In medieval Europe, churches became incorporated, as did local governments, such as the Pope and the City of London Corporation.
The point was that the incorporation would survive longer than the lives of any particular member, existing in perpetuity. The alleged oldest commercial corporation in the world, the Stora Kopparberg mining community in Falun, obtained a charter from King Magnus Eriksson in 1347. In medieval times, traders would do business through common law constructs, such as partnerships. Whenever people acted together with a view to profit, the law deemed. Early guilds and livery companies were often involved in the regulation of competition between traders. Dutch and English chartered companies, such as the Dutch East India Company and the Hudson's Bay Company, were created to lead the colonial ventures of European nations in the 17th century. Acting under a charter sanctioned by the Dutch government, the Dutch East India Company defeated Portuguese forces and established itself in the Moluccan Islands in order to profit from the European demand for spices. Investors in the VOC were issued paper certificates as proof of share ownership, were able to trade their shares on the original Amsterdam
Limited liability partnership
A limited liability partnership is a partnership in which some or all partners have limited liabilities. It therefore can exhibit elements of corporations. In a LLP, each partner is not liable for another partner's misconduct or negligence; this is an important difference from the traditional partnership under the UK Partnership Act 1890, in which each partner has joint and several liability. In a LLP, some or all partners have a form of limited liability similar to that of the shareholders of a corporation. Unlike corporate shareholders, the partners have the right to manage the business directly. In contrast, corporate shareholders must elect a board of directors under the laws of various state charters; the board organizes itself and hires corporate officers who have as "corporate" individuals the legal responsibility to manage the corporation in the corporation's best interest. A LLP contains a different level of tax liability from that of a corporation. Limited liability partnerships are distinct from limited partnerships in some countries, which may allow all LLP partners to have limited liability, while a limited partnership may require at least one unlimited partner and allow others to assume the role of a passive and limited liability investor.
As a result, in these countries, the LLP is more suited for businesses in which all investors wish to take an active role in management. In some countries, an LLP must have at least one person known as a "general partner", who has unlimited liability for the company. There is considerable difference between LLPs as constituted in the U. S. and those introduced in the UK under the Limited Liability Partnerships Act 2000 and adopted elsewhere. The UK LLP is, despite its name legislated as a corporate body rather than as a partnership. For a fuller country-by-country listing of types of partnerships and companies, see List of business entities. Partnerships are governed on a state-by-state basis in Australia. In Queensland, a limited liability partnership is composed of at least one general partner and one limited partner, it is thus similar to. All provinces—except Yukon, Prince Edward Island, Nunavut—permit LLPs for lawyers and accountants. In British Columbia, the Partnership Amendment Act, 2004 permits LLPs for lawyers and other professionals, as well as businesses.
In China, the LLP is known as a Special general partnership. The organizational form is restricted to knowledge-based professions and technical service industries; the structure shields co-partners from liabilities due to the willful misconduct or gross negligence of one partner or a group of partners. There is no exact equivalent of a Limited Liability Partnership in France. A limited partnership is equivalent to the French law vehicle known as a fr:Société en Commandite. A partnership company can be an equity partnership, known as a fr:Société en Participation, of a general partnership known as a fr:Société en Nom Collectif; the German Partnerschaftsgesellschaft or PartG is an association of non-commercial professionals, working together. Though not a corporate entity, it can sue and be sued, own property and act under the partnership's name; the partners, are jointly and severally liable for all the partnership's debts, except when only some partners' misconduct caused damages to another party — and only if professional liability insurance is mandatory.
Another exception, possible since 2012, is a Partnerschaftsgesellschaft mbB where all liabilities from professional misconduct are limited by the partnership's capital. The Partnerschaftsgesellschaft is not subject to corporate or business tax, only its partners' respective income is taxed. An LLP is an approximate equivalent to the Greek ΕΠΕ meaning Company of Limited Liability. In an ΕΠΕ the partners own personal shares that can be sold by a partner only when all other partners agree; the business management can be exercised either directly by the board of partners or by a General Manager. In the aspect of liability, an ΕΠΕ is identical to an LLP. In Hungary, LLP is equivalent to the Hungarian "Betéti Társaság" which must have at least two members: at least one must have unlimited liability and at least one must have limited liability. BTs have legal personhood under Hungarian law; the Limited Liability Partnership Act 2008 was published in the official Gazette of India on 9 January 2009 and has been in effect since 31 March 2009.
However, only limited sections of the Act have been ratified. Rules of the Act were published in the official Gazette on 1 April 2009 and amended in 2017; the first LLP was incorporated on 2 April 2009. In India as in many other jurisdictions, an LLP is different from a Limited Partnership. An LLP operates like a limited partnership, but in an LLP, each member is protected from personal liability, except to the extent of their capital contribution in the LLP. In India, for all purposes of taxation, an LLP is treated like any other Partnership firm. Liability is limited to each partners agreed upon contribution to the LLP. No partner is liable on account of the independent or unauthorized actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partner's wrongful business decisions or misconduct. An LLP shall be a body a legal entity separate from its partners, it will have perpetual succession. Indian Partnership Act, 1932 shall not be applicable to LLPs and there
A cooperative is "an autonomous association of persons united voluntarily to meet their common economic and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise". Cooperatives may include: businesses owned and managed by the people who use their services organizations managed by the people who work there multi-stakeholder or hybrid cooperatives that share ownership between different stakeholder groups. For example, care cooperatives where ownership is shared between both care-givers and receivers. Stakeholders might include non-profits or investors. Second- and third-tier cooperatives whose members are other cooperatives platform cooperatives that use a cooperatively owned and governed website, mobile app or a protocol to facilitate the sale of goods and services. Research published by the Worldwatch Institute found that in 2012 one billion people in 96 countries had become members of at least one cooperative; the turnover of the largest three hundred cooperatives in the world reached $2.2 trillion.
Cooperative businesses are more economically resilient than many other forms of enterprise, with twice the number of co-operatives surviving their first five years compared with other business ownership models. Cooperatives have social goals which they aim to accomplish by investing a proportion of trading profits back into their communities; as an example of this, in 2013, retail co-operatives in the UK invested 6.9% of their pre-tax profits in the communities in which they trade as compared with 2.4% for other rival supermarkets. Since 2002 cooperatives and credit unions could be distinguished on the Internet by use of a.coop domain. Since 2014, following International Cooperative Alliance's introduction of the Cooperative Marque, ICA cooperatives and WOCCU credit unions can be identified by a coop ethical consumerism label. Cooperation dates back as far. Tribes were organized as cooperative structures, allocating jobs and resources among each other, only trading with the external communities.
In alpine environments, trade could only be maintained in organized cooperatives to achieve a useful condition of artificial roads such as Viamala in 1472. Pre-industrial Europe is home to the first cooperatives from an industrial context; the roots of the cooperative movement can extend worldwide. In the English-speaking world, post-feudal forms of cooperation between workers and owners that are expressed today as "profit-sharing" and "surplus sharing" arrangements, existed as far back as 1795; the key ideological influence on the Anglosphere branch of the cooperative movement, was a rejection of the charity principles that underpinned welfare reforms when the British government radically revised its Poor Laws in 1834. As both state and church institutions began to distinguish between the'deserving' and'undeserving' poor, a movement of friendly societies grew throughout the British Empire based on the principle of mutuality, committed to self-help in the welfare of working people. In 1761, the Fenwick Weavers' Society was formed in Fenwick, East Ayrshire, Scotland to sell discounted oatmeal to local workers.
Its services expanded to include assistance with savings and loans and education. In 1810, Welsh social reformer Robert Owen, from Newtown in mid-Wales, his partners purchased New Lanark mill from Owen's father-in-law David Dale and proceeded to introduce better labour standards including discounted retail shops where profits were passed on to his employees. Owen left New Lanark to pursue other forms of cooperative organization and develop coop ideas through writing and lecture. Cooperative communities were set up in Glasgow and Hampshire, although unsuccessful. In 1828, William King set up a newspaper, The Cooperator, to promote Owen's thinking, having set up a cooperative store in Brighton; the Rochdale Society of Equitable Pioneers, founded in 1844, is considered the first successful cooperative enterprise, used as a model for modern coops, following the'Rochdale Principles'. A group of 28 weavers and other artisans in Rochdale, England set up the society to open their own store selling food items they could not otherwise afford.
Within ten years there were over a thousand cooperative societies in the United Kingdom. Other events such as the founding of a friendly society by the Tolpuddle Martyrs in 1832 were key occasions in the creation of organized labor and consumer movements. Friendly Societies established forums through which one member, one vote was practiced in organisation decision-making; the principles challenged the idea that a person should be an owner of property before being granted a political voice. Throughout the second half of the nineteenth century there was a surge in the number of cooperative organisations, both in commercial practice and civil society, operating to advance democracy and universal suffrage as a political principle. Friendly Societies and consumer cooperatives became the dominant form of organization amongst working people in Anglosphere industrial societies prior to the rise of trade unions and industrial factories. Weinbren reports that by the end of the 19th century, over 80% of British working age men and 90% of Australian working age men were members of one or more Friendly Society.
From the mid-nineteenth century, mutual organisations embraced these ideas in economic enterprises, firstly amongst tradespeople, in cooperative stores, educational institutes, financial institutions and industrial enterprises. The common thread (enacte
A societas Europaea is a public company registered in accordance with the corporate law of the European Union, introduced in 2004 with the Council Regulation on the Statute for a European Company. Such a company may more transfer to or merge with companies in other member states; as of April 2018, more than 3,000 registrations have been reported, including the following nine components of the Euro Stoxx 50 stock market index of leading Euro Area companies: Airbus, Allianz, BASF, E. ON, Fresenius, LVMH Moët Hennessy Louis Vuitton, SAP, Schneider Electric and Unibail-Rodamco. National law continues to supplement the basic rules in the Regulation on formation and mergers; the European Company Regulation is complemented by an Employee Involvement Directive that sets rules for participation by employees on the company's board of directors. There is a statute allowing European Cooperative Societies; the Statute provides four ways of forming a European limited company: By merger of national companies from different member states By the creation of a joint venture between companies in different member states By the creation of an SE subsidiary of a national company By the conversion of a national company into an SEFormation by merger is available only to public limited companies from different member states.
Formation of an SE holding company is available to public and private limited companies with their registered offices in different member states or having subsidiaries or branches in member states other than that of their registered office. Formation of a joint subsidiary is available under the same circumstances to any legal entities governed by public or private law; the SE must have a minimum subscribed capital of €120,000 as per article 4 of the directive, subject to the provision that where a member state requires a larger capital for companies exercising certain types of activities, the same requirement will apply to an SE with its registered office in that member state. The registered office of the SE designated in the statutes must be the place where it has its central administration, to say its true centre of operations; the SE may transfer its registered office within the European Economic Area without dissolving the company in one member state in order to form a new one in another member state.
The order of precedence of the laws applicable to the SE is clarified. The registration and completion of the liquidation of an SE must be disclosed for information purposes in the Official Journal of the European Communities; every SE must be registered in the State where it has its registered office, in a register designated by the law of that State. The Statutes of the SE must provide as governing bodies the general meeting of shareholders and either a management board and a supervisory board or an administrative board. Under the two-tier system the SE is managed by a management board; the member or members of the management board have the power to represent the company in dealings with third parties and in legal proceedings. They are removed by the supervisory board. No person may be a member of both the management board and the supervisory board of the same company at the same time, but the supervisory board may appoint one of its members to exercise the functions of a member of the management board in the event of absence through holidays.
During such a period the function of the person concerned as a member of the supervisory board shall be suspended. Under the single-tier system, the SE is managed by an administrative board; the member or members of the administrative board have the power to represent the company in dealings with third parties and in legal proceedings. Under the single-tier system the administrative board may delegate the power of management to one or more of its members; the following operations require the authorization of the supervisory board or the deliberation of the administrative board: any investment project requiring an amount more than the percentage of subscribed capital the conclusion of supply and performance contracts where the total turnover provided for therein is more than the percentage of turnover for the previous financial year the raising or granting of loans, the issue of debt securities and the assumption of liabilities of a third party or suretyship for a third party where the total money value in each case is more than the percentage of subscribed capital the setting-up, disposal or closing down of undertakings, businesses or parts of businesses where the purchase price or disposal proceeds account for more than the percentage of subscribed capital the percentage referred to above is to be determined by the Statutes of the SE.
It may not be less than 5% nor more than 25%. The SE must draw up annual accounts comprising the balance sheet, the profit and loss account, the notes to the accounts, an annual report giving a fair view of the company's business and of its position. In tax matters, the SE is treated the same as any other multinational, i.e. it is subject to the tax regime of the national legislation applicable to the company and its subsidiaries. SEs are subject to taxes and charges in all member states where their administrative c
Corporate law is the body of law governing the rights and conduct of persons, companies and businesses. It refers to the theory of corporations. Corporate law describes the law relating to matters which derive directly from the life-cycle of a corporation, it thus encompasses the formation, funding and death of a corporation. While the minute nature of corporate governance as personified by share ownership, capital market, business culture rules differ, similar legal characteristics - and legal problems - exist across many jurisdictions. Corporate law regulates how corporations, shareholders, employees and other stakeholders such as consumers, the community, the environment interact with one another. Whilst the term company or business law is colloquially used interchangeably with corporate law, business law refers to wider concepts of commercial law, that is, the law relating to commercial or business related activities. In some cases, this may include matters relating to financial law; when used as a substitute for corporate law, business law means the law relating to the business corporation, i.e. capital raising, company formation, etc.
Academics identify four legal characteristics universal to business enterprises. These are: Separate legal personality of the corporation Limited liability of the shareholders Transferable shares Delegated management under a board structure. Available and user-friendly corporate law enables business participants to possess these four legal characteristics and thus transact as businesses. Thus, corporate law is a response to three endemic opportunism: conflicts between managers and shareholders, between controlling and non-controlling shareholders. A corporation may be called a company. In the United States, a company may or may not be a separate legal entity, is used synonymous with "firm" or "business." According to Black's Law Dictionary, in America a company means "a corporation — or, less an association, partnership or union — that carries on industrial enterprise." Other types of business associations can include partnerships, or trusts, or companies limited by guarantee. Corporate law deals with companies that are incorporated or registered under the corporate or company law of a sovereign state or their sub-national states.
The defining feature of a corporation is its legal independence from the shareholders. Under corporate law, corporations of all sizes have separate legal personality, with limited or unlimited liability for its shareholders. Shareholders control the company through a board of directors which, in turn delegates control of the corporation's day-to-day operations to a full-time executive. Shareholders' losses, in the event of liquidation, are limited to their stake in the corporation, they are not liable for any remaining debts owed to the corporation's creditors; this rule is called limited liability, it is why the names of corporations end with "Ltd.". or some variant such as "Inc." or "plc"). Under all legal systems corporations have much the same legal rights and obligations as individuals. In some jurisdictions, this extends to allow corporations to exercise human rights against real individuals and the state, they may be responsible for human rights violations. Just as they are "born" into existence through its members obtaining a certificate of incorporation, they can "die" when they lose money into insolvency.
Corporations can be convicted of criminal offences, such as corporate fraud and corporate manslaughter. In order to understand the role corporate law plays within commercial law, it is useful to understand the historical development of the corporation, the development of modern company law. Although some forms of companies are thought to have existed during Ancient Rome and Ancient Greece, the closest recognizable ancestors of the modern company did not appear until the 16th century. With increasing international trade, Royal charters were granted in Europe to merchant adventurers; the Royal charters conferred special privileges on the trading company. Traders in these entities traded stock on their own account, but the members came to operate on joint account and with joint stock, the new Joint stock company was born. Early companies were purely economic ventures; the development of company law in Europe was hampered by two notorious "bubbles" in the 17th century, which set the development of companies in the two leading jurisdictions back by over a century in popular estimation.
Companies inevitably, returned to the forefront of commerce, although in
Delaware statutory trust
A Delaware statutory trust is a recognized trust, set up for the purpose of business, but not in the U. S. state of Delaware. It may be referred to as an Unincorporated Business Trust or UBO. Delaware statutory trusts are formed as private governing agreements under which either property is held, administered, invested and/or operated. DST Investments are offered as replacement property for accredited investors seeking to defer their capital gains taxes through the use of a 1031 tax deferred exchange and as straight cash investments for those wishing to diversify their real estate holdings; the DST property ownership structure allows the smaller investor to own a fractional interest in large, institutional quality and professionally managed commercial property along with other investors, not as limited partners, but as individual owners within a Trust. Each owner receives their percentage share of the cash flow income, tax benefits, appreciation, if any, of the entire property. DSTs provide the investor the potential for annual appreciation and depreciation, most have minimum investments as low as $100,000, allowing some investors the benefit of diversification into several properties.
The DST ownership option offers the same benefits and risks that an investor would receive as a single large-scale investment property owner, but without the management responsibility. Each DST property asset is managed by professional investment real estate asset managers and property managers, it used to be that only large institutional investors such as life insurance companies, pension funds, real estate investment trusts, college endowments and foundations were able to invest in these properties. Now as a viable 1031 exchange replacement property option through a DST, individual investors have the ability to invest in a diversified selection of institutional quality, investment property types that they otherwise could not purchase individually. DST Investments are located throughout the United States. Property types may include multifamily apartment communities, office buildings, industrial properties, multi-tenant retail, student housing, assisted living, self-storage facilities, medical office, single tenant retail properties and others.
The concept for business trusts those that involve the holding of property, dates back to 16th century English Common Law. In Delaware, it was not until 1947. No legal recognition of statutory trusts existed until the passage of the Delaware Statutory Trust Act, 12 Del. C. 3801 et. Seq. in 1988. Under The Act, developed on the premise of trust law, statutory trusts were now recognized as their own legal entity, separate from their trustee, offering freedom from the corporate law template. Within the tradition of trust law, freedom of contract allows the trustee to structure their entity in a way, most beneficial to the relationship of all parties and their expertise, while offering liability protection similar to that of a Limited liability company or Partnership. Since the year 2000, Delaware statutory trusts have been used as a form of tax deferral, asset protection, balance sheet advantages in real estate, mezzanine financing, real estate investment trusts, mutual funds. Massachusetts, another state that has trust law, refers to its legal entity as a Massachusetts business trust.
Most states, still rely on Common Law to oversee the trusts within their jurisdiction. The formation of a Delaware statutory trust is simple and inexpensive, when compared to that of the more complex filings of other entity types. To form a statutory trust, a private trust agreement must be developed by all involved parties to ensure that individual interests are protected; the private trust agreement need not be shown to any official of the State. Once the agreement is completed, a Certificate of Trust can be obtained from the Delaware Division of Corporations and completed; the signatures of the trustee involved are required, followed by submission of the forms to the Division of Corporations, along with a one-time $200 processing fee. If the statutory trust is, or will become, a registered investment company, it must maintain a registered agent and a registered office within the State of Delaware. If no desire for the statutory trust to be an investment company exists, the only remaining requirement is that it must have at least one trustee who resides in, or has a principal place of business within the State of Delaware.
On August 16, 2004, Internal Revenue Bulletin 2004-33 was published in reference to Rev. Rul. 2004-86. This involved a Delaware Statutory Trust that came before the Internal Revenue Service and Treasury Department, who offered a ruling on the following two issues: "ow is a Delaware statutory trust, described in Del. Code Ann. Title 12, §§ 3801 - 3824, classified for federal tax purposes?""The Delaware statutory trust described above is an investment trust, under § 301.7701-4, that will be classified as a trust for federal tax purposes." "ay a taxpayer exchange real property for an interest in a Delaware statutory trust without recognition of gain or loss under § 1031 of the Internal Revenue Code?""A taxpayer may exchange real property for an interest in the Delaware statutory trust described above without recognition of gain or loss under § 1031, if the other requirements of § 1031 are satisfied."These holdings of the federal government offered a clearer notion that Delaware statutory trusts are