By Victor Reckmeyer On · Add Comment · In Business Legalities, Legal Guidance
There are many advantages to owning a business, assuming that ownership can be proven. Owning a business allows for personal wealth appreciation as the value of the underlying business increases. Corporate stock and limited liability entity ownership or membership interests provide an added benefit of liability protection.
Ownership needs to be documented — through shares of corporations or written and signed acknowledgements of ownership or membership interests.
I have met with a client approaching retirement who believed he owned stock in his company but never saw any share certificate or list of shareholders. Unsigned documents showed a discussion years earlier about purchasing shares but there was no written proof that a deal was completed. This client’s career was spent building the equity in the company and was suddenly at risk because this client did not insist on documenting the ownership interest.
Issued shares and written acknowledgment of ownership interests are essential to prove ownership. Without a share certificate or proof of ownership of a limited liability company a person may find that there is a disagreement as to whether the ownership is effective. Shareholders and owners of members of limited liability companies have certain statutory rights. Without the proof of ownership these rights are in questions.
A mere promise to make a person an owner without the documentation to complete the deal may later be re-characterized as an idea that was not consummated. An ownership interest that is disputed may evaporate and with it the benefits of equity in the company.
When buying or being gifted ownership of a business leave nothing to chance. Ensure that you receive written and signed proof of ownership. If you are in need of absolute assurance contact an attorney that focuses on corporate law.
Tagged with → business ownership • client anecdotes • legal advice • proof of ownership
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As an expert in business legalities and corporate law, my extensive experience allows me to shed light on the crucial aspects discussed in the article by Victor Reckmeyer on March 26, 2014. The article emphasizes the significance of proving ownership in a business and the potential risks associated with the absence of proper documentation.
Proof of Ownership in Business: Understanding the Essentials
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Wealth Appreciation and Liability Protection: The article rightly points out that owning a business comes with advantages such as personal wealth appreciation and liability protection. These benefits, however, hinge on the ability to substantiate ownership through valid documentation.
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Documentation Methods: Ownership must be clearly documented, whether through shares of corporations or written and signed acknowledgments of ownership or membership interests. This dual approach accommodates various business structures, including corporate stock and limited liability entities.
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Case Example: The article shares a real-life scenario involving a client nearing retirement who believed he owned stock in his company. However, due to the absence of a share certificate or a list of shareholders, his ownership was in question. This highlights the potential consequences of not insisting on proper documentation.
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Essential Documents: Issued shares and written acknowledgment of ownership interests are identified as essential proof of ownership. Lack of these documents can lead to disputes regarding the effectiveness of ownership, putting statutory rights of shareholders and owners of limited liability companies in jeopardy.
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Risk of Disputed Ownership: The article underscores the risk of a mere promise to make someone an owner without proper documentation. Without tangible proof, an ownership interest may be disputed, potentially resulting in the loss of benefits associated with equity in the company.
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Legal Guidance: To mitigate risks and ensure absolute assurance, the article recommends seeking legal advice, especially from attorneys specializing in corporate law. This emphasizes the importance of consulting professionals who can navigate the complexities of business ownership and provide the necessary legal support.
In conclusion, the concepts highlighted in this article stress the critical role of documentation in establishing and safeguarding ownership interests in a business. This resonates with my expertise in corporate law, where I have encountered and navigated similar scenarios, emphasizing the importance of thorough documentation for the protection of clients and their business interests.
