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Ownership Structure of Business Entities

9. What is the “ownership structure” for a business entity?

Ownership structure concerns the internal organization of a business entity and the rights and duties of the individuals holding a legal or equitable interest in that business. As owner of the business entity, it is important to understand how the ownership structure of a particular business entity is organized and what that means for the owner’s rights.

•    Example: A shareholder, as owner of a corporation, has certain rights. These rights are distinct from those of members of a limited liability company. Further, within the corporation, a holder of preferred stock may have different rights than the holder of common stock.

•    Discussion: Why do you think different types of business entity allow for unique ownership structures? Why do you think ownership structure is so important for business owners?

•    Practice Question: Can you think of any situation where ownership of the business entity became an issue between the founders or co-owners of the businesses? What was the basis of the dispute and what was the outcome?

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