Uncorporation
Encyclopedia
An uncorporation is an unorthodox form of large business
organization. The term appears to embrace any unincorporated business. An uncorporation may be formed in an effort to align managers' and owners' interests more closely than in a typical corporation, or may donate most of its profits to charity, or may pursue social responsibility
goals that conflict with traditional corporate shareholder primacy
. Equally, it escapes the regulatory supervision and checks and balances to which corporations are subject. Large firms structured as partnership
s are sometimes regarded as uncorporations. The rise of uncorporations resulted partly from costly corporate monitoring devices such as independent directors, owner voting, and fiduciary duties being often ineffective. Publicly traded partnerships, real estate investment trust
s, hedge fund
s and venture capital funds are other types of uncorporations. A business trust is another type of uncorporation that has long been a competition of corporation as a form of business organization.
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
organization. The term appears to embrace any unincorporated business. An uncorporation may be formed in an effort to align managers' and owners' interests more closely than in a typical corporation, or may donate most of its profits to charity, or may pursue social responsibility
Social responsibility
Social responsibility is an ethical ideology or theory that an entity, be it an organization or individual, has an obligation to act to benefit society at large. Social responsibility is a duty every individual or organization has to perform so as to maintain a balance between the economy and the...
goals that conflict with traditional corporate shareholder primacy
Shareholder primacy
Shareholder primacy is a theory in corporate governance holding that shareholder interests should be assigned first priority. A shareholder primacy approach often gives shareholders power to intercede directly and frequently in corporate decisionmaking, through such means as unilateral shareholder...
. Equally, it escapes the regulatory supervision and checks and balances to which corporations are subject. Large firms structured as partnership
Partnership
A partnership is an arrangement where parties agree to cooperate to advance their mutual interests.Since humans are social beings, partnerships between individuals, businesses, interest-based organizations, schools, governments, and varied combinations thereof, have always been and remain commonplace...
s are sometimes regarded as uncorporations. The rise of uncorporations resulted partly from costly corporate monitoring devices such as independent directors, owner voting, and fiduciary duties being often ineffective. Publicly traded partnerships, real estate investment trust
Real estate investment trust
A real estate investment trust or REIT is a tax designation for a corporate entity investing in real estate. The purpose of this designation is to reduce or eliminate corporate tax. In return, REITs are required to distribute 90% of their taxable income into the hands of investors...
s, hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
s and venture capital funds are other types of uncorporations. A business trust is another type of uncorporation that has long been a competition of corporation as a form of business organization.