Project 4

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Project 4

• Find a U.S. public corporation involved in some
  way with your topic
• A. Describe its current operation
• Pay attention to the location of its various
  parts and its product line
• Pay attention, also, to the political and legal
  environment in which it carries out its business
• B. Describe the corporation's history for the
  past half century, especially changes in the
  location of its plants, its product line and its
  operational environment

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The Nature of Corporations
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Corporations

• A corporation is a legal entity which, while
  being composed of individuals, exists completely
  separately from them
• A corporation has unique legal powers determined
  by the law of the state in which the business is
  incorporated
• Minnesota Business Corporation Act (1981)
• Corporations, Business Organizations, and
  Associations Law (LawMoose)
• Importance of Corporations (ActionPA.org)
• CorpWatch.org
• Corporations (Anup Shar)

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Federal Policy in part

• Federal Statutes
• 15 USC Commerce Trade (Cornell University)
• 12 USC Banks Banking (Cornell University)
• 29 USC Internal Revenue Code (Cornell University)
• Federal Regulation
• 12 CFR Banks Banking
• 13 CFR Business Credit Assistance
• 16 CFR Commercial Practices
• 17 CFR Commodities Security Exchange
• Uniform Commercial Code law governing
  commercial transactions

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• US Department of Labor
• Occupational Health Safety
• US Department of Commerce
• International Trade Administration

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Minnesota Corporations

• Corporations in Minnesota (Secretary of State)
• Minnesota Cooperatives (Secretary of State)
• Other Corporations (Secretary of State)
• Minnesota Statutes
• Minnesota Rules
• An Overview of Business Entities in Minnesota (MN
  Dept. of Revenue)

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Public Corporations

• Joint stock company - a business partnership in
  which capital is collected from the individual
  contributions of shareholders, each of which is
  given certificates of ownership (stocks) in
  return
• The shareholders are free to transfer their
  ownership interest at any time by selling their
  stockholding to others
• Ownership of stock confers a number of privileges
  
• The company is managed on behalf of the
  shareholders by an elected Board of Directors
  unusual for shareholder to be on board
• Hold annual general meeting, produce an annual
  report, are audited yearly
• Shareholders share in the company's net profit
  also called a divided calculated as net profit
  divided by the total number of owned shares
• (Individual share of the profit is the dividend
  multiplied by the number of shares owned)
• Shareholders are liable for company debts that
  exceed the company's ability to pay but limited
  to the face value of their shareholding

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Stock Exchange

• An organization providing facilities for
  individuals to trade company stocks and other
  securities
• Also provide facilities for the issue and
  redemption of securities and other financial
  instruments and payment of income and dividends
• Securities traded on a stock exchange include
  shares issued by companies, unit trusts and other
  pooled investment products and bonds
• To be able to trade a security on a certain stock
  exchange, it has to be listed there
• Usually there is a local central location at
  least for recordkeeping, but trade is less and
  less linked to such a physical place, as modern
  markets are electronic networks

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Stock Exchange

• Bonds and stocks are both securities
• Stock holders own a part of the company that
  issues the stock
• Stocks may be held indefinitely or sold
  immediately
• Bond holders loan the company money
• Bonds usually have a defined term, or maturity,
  after which the bond is redeemed

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Holding company

• A company that owns part, all, or a majority of
  other companies' outstanding stock
• Usually refers to a company which does not
  produce goods or services itself, rather its sole
  purpose is owning shares of other companies
• Holding companies allow the reduction of risk for
  the owners and can allow the ownership and
  control of a number of different companies
• Eighty percent or more of voting stock must be
  owned before tax consolidation benefits such as
  tax-free dividends can be claimed
• In the United States, Berkshire Hathaway is one
  of the largest publicly traded holding companies
  it owns numerous insurance companies,
  manufacturing businesses, retailers, and other
  companies
• UAL Corporation and AMR Corporation publicly
  traded holding companies whose primary purposes
  are to wholly own United Airlines and American
  Airlines

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• NYSE Euronext, the holding company created by the
  combination of NYSE Group, Inc. and Euronext
  N.V., was launched on April 4, 2007.
• Operates the worlds largest and most liquid
  exchange group and offers the most diverse array
  of financial products and services.
• Brings together six cash equities exchanges in
  five countries and six derivatives exchanges, is
  a world leader for listings, trading in cash
  equities, equity and interest rate derivatives,
  bonds and the distribution of market data
• The NASDAQ

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Public Companies

• Public corporations those owned by the public,
  whose stock is traded on the New York Stock
  Exchange or other exchanges
• Any company that files a Form S-1 with the
  Securities and Exchange Commission (SEC) and
  raises money from the public
• A public company needs to file reports
• a public company with 300 or more shareholders as
  defined in the 1933 Securities Act can elect to
  become a reporting company
• a public company with 500 or more public
  shareholders or a company with some public
  shareholders and assets of 5 million dollars
  must become a reporting company
• May incorporate in any state
• Minnesota Statutes
• Minnesota Department of Commerce

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Securities Exchange Commission

• The mission of the U.S. Securities and Exchange
  Commission is to protect investors, maintain
  fair, orderly, and efficient markets, and
  facilitate capital formation
• Statutes and rules that govern the securities
  industry in the United States derive from a
  simple and straightforward concept
• All investors, whether large institutions or
  private individuals, should have access to
  certain basic facts about an investment prior to
  buying it, and so long as they hold it
• Statutes that govern the securities industry
• 17 CFR Securities and Exchange Commission
• Securities Law (FindLaw)
• SECLaw.com

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Private Corporations

• Companies which are privately owned
• Capital raised via private funds
• Does not need to meet the strict Securities and
  Exchange Commission filing requirements of public
  companies
• US largest private companies (Forbes.com)
• Finding out about private companies (Chris Roush,
  UNC)
• Often family owned Cargill, Carlson Companies,
  Dairy Queen, Anderson Windows

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Private Equity

• Venture capital an investment to create a new
  company, or expand a smaller company that has
  undeveloped or developing revenues
• Buy-out acquisition of a significant portion or a
  majority control in a more mature company. The
  acquisition normally entails a change of
  ownership
• Special situation investments in a distressed
  company, or a company where value can be unlocked
  as a result of a one-time opportunity (Changing
  industry trends, government regulations etc.)
• Avista Capital Partners
• Norwest Equity Partners
• Private equity, private lives (CNNMoney.com)
• Private equitys impact limited (TwinCities.com)

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Real Estate Investment Trusts (REIT)

• A tax designation for a corporation investing in
  real estate that reduces or eliminates corporate
  income taxes
• REITs are required to distribute 90 of their
  income, which may be taxable in the hands of the
  investors
• The REIT structure was designed to provide a
  similar structure for investment in real estate
  as mutual funds provide for investment in stocks
• Like other corporations REITs can be publicly or
  privately held
• Public REITs may be listed on public stock
  exchanges like shares of common stock in other
  firms.
• REITs can be classified as equity, mortgage, or
  hybrid
• List of Public REITs in USA

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Cooperatives

• A legal entity owned and democratically
  controlled by its members, with no passive
  shareholder
• It combines the characteristic of many
  partnerships with the legality conferred on
  corporations
• Most cooperatives are organized as limited
  liability companies but other legal entities may
  also be used
• May or may not pay dividends to members by way of
  a rebate or bonus on their activity with the
  cooperative, or a dividend on their shareholding
  in the cooperative
• Electric Cooperatives
• Dairy Cooperatives
• Land OLakes

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Government Corporations (GAO)

• A a corporate entity established by Congress in
  which the government holds all equity.
• Most listed in the Government Corporation Control
  Act (1945)
• The Act does not serve as a general incorporation
  law each of these corporations have their own
  enabling legislation that stipulates its powers
• Commodity Credit Corporation
• Federal Deposit Insurance Corporation (FDIC)
• Pension Benefit Guarantee Corporation
• Tennessee Valley Authority (TVA)
• The Saint Lawrence Seaway Development Corporation
  
• US Postal Service
• Federal Home Loan Mortgage Corporation
• Fannie Mae

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Internal Revenue Service

• Excise Tax taxes paid on a specific good, such
  as gasoline
• Usually included in the price of the product
• Also excise taxes on activities, such as on
  wagering or on highway usage by trucks
• Employment Taxes for Businesses
• Capital Gains Losses
• Corporate Fraud
• Corporate Earnings

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Economics of Taxation

• The Federal Government relies mainly on income
  taxes for its revenue
• State governments depend on both income and sales
  taxes
• Most county and city governments use property
  taxes to raise their revenue

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Income Taxes

• Income Tax - earnings of both individuals and
  corporations
• Most of the federal government's revenue comes
  from income taxes
• Individual income tax produces about five times
  as much revenue as the corporate income tax
• Not all income tax taxed in the same way -
  taxpayers owning stock in a corporation and then
  selling it at a gain or loss must report it on a
  special schedule
• This item and any other gains or losses get
  calculated separately before they get added to
  other income
• By comparison, the interest they earn on money in
  a regular savings account gets included with
  wages, salaries and other "ordinary" income
• There are also many types of tax-exempt and
  tax-deferred savings plans available that impact
  on people's taxes

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Payroll Taxes

• Payroll taxes are an important source of revenue
  for the Federal Government.
• Employers are responsible for paying these taxes,
  which include social security insurance and
  unemployment compensation
• Employees also pay into the social security
  program through money withheld from their
  paychecks
• Some state governments also use payroll taxes to
  pay for the state's unemployment compensation
  programs

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Corporate Taxes

• Federal Corporate Taxes (Infoplease)
• Corporation Taxes (CCH)
• Reexamining the Federal Corporate Income Tax (Tax
  Foundation)

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Political, religious, environmental, and
charitable purposes Nonprofit Organizations

• A guide to environmental nonprofits (MotherJones)
• Environmental Law Institute
• Environmental Defense Fund
• Natural Resources Defense Council
• Land Trust Alliance
• A Guide to Minnesota's charity laws (MN Dept of
  Agriculture)
• Tax for Nonprofits

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Labor Unions

• Objectives and activities but often include
• Provide benefits to members - professional
  training and legal advice and representation
• Collective bargaining negotiate with employers
  over wages and working conditions.
• Industrial action organize strikes or
  resistance to lockouts
• Political activity promote legislation
  favorable to the interests of their members or
  workers as a whole pursue campaigns, undertake
  lobbying, or financially support individual
  candidates or parties
• US Labor Law

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Trade Associations

• Professional Societies and Trade Associations

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Pensions

• Governed primarily by federal statutory law the
  Employee Retirement Income Security Act
• Defined benefit plan the benefit that an employee
  receives is normally based on the length of a
  workers employment and the wages that were
  received
• Each employee does not have a separate account in
  these programs, as the money to support the
  pensions is generally administered through a
  trust established by the employer
• Defined contribution plan the employer makes
  regular deposits into an account established for
  each employee
• The employee receives the amount in the account
  at retirement
• Act passed in response to the mismanagement of
  funds in direct benefit plans
• All employers who engage in interstate commerce
  and provide defined benefit plans to their
  employees must abide by ERISA guidelines

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Archives

• A collection of the records of corporate entities
• Usually arranged according to corporate
  organization

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Municipal corporation

• Minnesota Statutes
• Minneapolis

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Minneapolis Chamber of Commerce
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NewMarket Corp

• Holding company parent company
• Afton Chemical Corporation - develops,
  manufactures, and blends fuel and lubricant
  additive products, and markets and sells these
  products worldwide
• Ethyl Corporation -manufactures diesel and
  gasoline performance additives, markets
  Tetraethyl Lead (TEL) primarily in North America
• NewMarket Services Corporation provides various
  administrative services to Co., Afton, and Ethyl