4 ms·

I'm willing to be convinced different, but I think it would be better if companies had to be owned by a person or people ie that companies can't own companies.

I'm willing to be convinced different, but I think it would be better if companies had to be owned by a person or people ie that companies can't own companies. It seems a layer of indirection that is more harmful than useful.

piker 10mo ago
Honestly as a corporate lawyer I have never heard this view expressed, but it’s super interesting.
- onraglanroad 10mo ago
  What are some obvious objections that would spring to your mind? Edit: sorry, that was very abrupt! Nice to have your input. I would be interested to hear what you think would be problematic about the Idea.
  - piker 10mo ago
    It's inefficient in the case of a wholly-owned subsidiary to require company A's shareholders to hire lawyers, setup bank accounts, books, etc. for a separate company B which ultimately provides the same limited liability vis-a-vis third parties. Joint-ventures become tricky between corporations. Corporations can't hold potentially toxic assets. There are quite a few good ones. Interesting nonetheless. Also as with all corporate law questions, <other jurisdiction> allows it, so we'll just go there instead.
    - onraglanroad 10mo ago
      I'm not sure I understand your first point. If a company can't own another company there's no such thing as a "wholly-owned subsidiary". If you buy a company they become the same company. I'll try to stick to one thought at a time.
- niobe 10mo ago
  Also super unlikely, and only worth discussing except as a theoretical exercise. We just aren't undoing centuries of law. Same reason trusts are here to stay.
  - onraglanroad 10mo ago
    Less than 200 years unless I'm misreading. Doesn't seem that difficult to change.
fooker 10mo ago
It’s harmful until you are the one getting personally sued by random grifters. We limit liability for risky ventures for a reason.
- piker 10mo ago
  Yes but there’s nothing stopping the shareholders of company A from forming company B rather than company A dropping it as a subsidiary.
- dragonwriter 10mo ago
  > We limit liability for risky ventures for a reason. Because the investor class had the political powers to get that protection written into law for themselves, so as to externalize risks while privatizing rewards.
  - fooker 10mo ago
    The alternative has been the government controlling which ventures are funded, at which point the government assumes the risk. Would you rather the only entity with a monopoly on violence be liable for all risky ventures? What happens when the government has a very different ideology and goals than what you support? Again, there is a reason the status quo of private capital doing risky business with limited liability tends to work better. You don’t have to like it.
    - onraglanroad 10mo ago
      Limited liability is the government interfering. Otherwise the liability wouldn't be limited. You'd have to pay all your debts.
      - fooker 10mo ago
        > Limited liability is the government interfering I agree. That was not the point I was making. The government interferes here for good reason, as no one would start a business if they would be personally responsible for random things. The LL in LLC is Limited Liability. Most governments want to make it easy to start a business. This is the status quo because it has been consistently better than the government doing everything and being liable for everything. With private companies, you have various branches of the government with some ability to correct or regulate matters when a private entity is liable or responsible for something. In the alternative scenario, when something goes wrong and the government is liable, good luck getting the government to find itself liable.
epistasis 10mo ago
As somebody who really appreciates being able to own a ton of different companies in small amounts in my retirement account, I'm not sure if this is the right way to solve the problem. Requiring full disclosure of all ownership stakes, traceable back to individuals, is probably a better route for this. And it seems that there's a trend towards that, last company I registered had a new process for listing beneficial ownership of all significant amounts. Just need to push that legislation further.
- onraglanroad 10mo ago
  I'm not sure what you see as a difficulty here. You own a bit of those companies. You're a person. What do you see as the problem?
  - epistasis 10mo ago
    I want a third party to manage the buying and selling of shares as I incrementally put in small amounts of money every week into the fund. Technically I own the fund, and the fund owns the companies. As I understand your comment, this would be disallowed.
    - onraglanroad 10mo ago
      You could either make an exception for funds, or simply make them owned directly. Probably impossible before computerisation but fairly straightforward now. These don't seem difficult problems to me.
      - epistasis 10mo ago
        The difficult problem is how you distinguish a fund for consumers versus the types of funds you want to disallow. Start trying to codify that in law and it will quickly bring people finding the edges for their own purposes. Full public disclosure of all beneficial ownership in entities would go a lot further, IMHO.
kmeisthax 10mo ago
If I am running a business in the US and I want to set up shop in Canada or France, I have to register a second business in that country and have my US headquarters own it. What I want is for ownership of the foreign subsidiary to directly mirror the primary company's, and the most efficient way to do it is to just have the US company own the foreign one. If companies can't own companies, then instead I have to directly transfer ownership over the subsidiary to the shareholders of the primary company. That means they can sell their shares of the foreign subsidiary independently of the headquarters, and the two companies' ownership will diverge over time. I am effectively forced to IPO the foreign subsidiary at the moment of their creation. You can't assign ownership to the current CEO or board members, because that creates a conflict of interest. They'd be able to take a US company they manage and turn it into a foreign subsidiary they own. This would also make joint ventures, mergers, and acquisitions far more difficult and complicated, if not impossible.
- onraglanroad 10mo ago
  > If companies can't own companies, then instead I have to directly transfer ownership over the subsidiary to the shareholders of the primary company. That sounds fine to me. They're different companies. Why shouldn't I be able to sell my shares in Amazon UK while keeping them in Amazon France? Or countries could come to some agreement on cross country companies. Your last paragraph is pretty meaninglessness. In all those circumstances two companies just become one.
fsckboy 10mo ago
banning corporate ownership of other companies would dramatically decrease the value of companies that people own. it would be much more difficult to sell your company. you might have built a successful company over the course of your life, and your children don't want to run it. Other companies in the same business but perhaps not in the same regious are good candidates to buy it. There are far fewer individuals with the assets to purchase a successful company. should other companies wish to buy your company, they could still buy all the assets of your company, but not the company itself.

piker 10mo ago

Honestly as a corporate lawyer I have never heard this view expressed, but it’s super interesting.

onraglanroad 10mo ago
What are some obvious objections that would spring to your mind? Edit: sorry, that was very abrupt! Nice to have your input. I would be interested to hear what you think would be problematic about the Idea.
- piker 10mo ago
  It's inefficient in the case of a wholly-owned subsidiary to require company A's shareholders to hire lawyers, setup bank accounts, books, etc. for a separate company B which ultimately provides the same limited liability vis-a-vis third parties. Joint-ventures become tricky between corporations. Corporations can't hold potentially toxic assets. There are quite a few good ones. Interesting nonetheless. Also as with all corporate law questions, <other jurisdiction> allows it, so we'll just go there instead.
  - onraglanroad 10mo ago
    I'm not sure I understand your first point. If a company can't own another company there's no such thing as a "wholly-owned subsidiary". If you buy a company they become the same company. I'll try to stick to one thought at a time.
niobe 10mo ago
Also super unlikely, and only worth discussing except as a theoretical exercise. We just aren't undoing centuries of law. Same reason trusts are here to stay.
- onraglanroad 10mo ago
  Less than 200 years unless I'm misreading. Doesn't seem that difficult to change.

fooker 10mo ago

It’s harmful until you are the one getting personally sued by random grifters. We limit liability for risky ventures for a reason.

piker 10mo ago
Yes but there’s nothing stopping the shareholders of company A from forming company B rather than company A dropping it as a subsidiary.
dragonwriter 10mo ago
> We limit liability for risky ventures for a reason. Because the investor class had the political powers to get that protection written into law for themselves, so as to externalize risks while privatizing rewards.
- fooker 10mo ago
  The alternative has been the government controlling which ventures are funded, at which point the government assumes the risk. Would you rather the only entity with a monopoly on violence be liable for all risky ventures? What happens when the government has a very different ideology and goals than what you support? Again, there is a reason the status quo of private capital doing risky business with limited liability tends to work better. You don’t have to like it.
  - onraglanroad 10mo ago
    Limited liability is the government interfering. Otherwise the liability wouldn't be limited. You'd have to pay all your debts.
    - fooker 10mo ago
      > Limited liability is the government interfering I agree. That was not the point I was making. The government interferes here for good reason, as no one would start a business if they would be personally responsible for random things. The LL in LLC is Limited Liability. Most governments want to make it easy to start a business. This is the status quo because it has been consistently better than the government doing everything and being liable for everything. With private companies, you have various branches of the government with some ability to correct or regulate matters when a private entity is liable or responsible for something. In the alternative scenario, when something goes wrong and the government is liable, good luck getting the government to find itself liable.

epistasis 10mo ago

As somebody who really appreciates being able to own a ton of different companies in small amounts in my retirement account, I'm not sure if this is the right way to solve the problem. Requiring full disclosure of all ownership stakes, traceable back to individuals, is probably a better route for this. And it seems that there's a trend towards that, last company I registered had a new process for listing beneficial ownership of all significant amounts. Just need to push that legislation further.

onraglanroad 10mo ago
I'm not sure what you see as a difficulty here. You own a bit of those companies. You're a person. What do you see as the problem?
- epistasis 10mo ago
  I want a third party to manage the buying and selling of shares as I incrementally put in small amounts of money every week into the fund. Technically I own the fund, and the fund owns the companies. As I understand your comment, this would be disallowed.
  - onraglanroad 10mo ago
    You could either make an exception for funds, or simply make them owned directly. Probably impossible before computerisation but fairly straightforward now. These don't seem difficult problems to me.
    - epistasis 10mo ago
      The difficult problem is how you distinguish a fund for consumers versus the types of funds you want to disallow. Start trying to codify that in law and it will quickly bring people finding the edges for their own purposes. Full public disclosure of all beneficial ownership in entities would go a lot further, IMHO.

kmeisthax 10mo ago

If I am running a business in the US and I want to set up shop in Canada or France, I have to register a second business in that country and have my US headquarters own it. What I want is for ownership of the foreign subsidiary to directly mirror the primary company's, and the most efficient way to do it is to just have the US company own the foreign one. If companies can't own companies, then instead I have to directly transfer ownership over the subsidiary to the shareholders of the primary company. That means they can sell their shares of the foreign subsidiary independently of the headquarters, and the two companies' ownership will diverge over time. I am effectively forced to IPO the foreign subsidiary at the moment of their creation. You can't assign ownership to the current CEO or board members, because that creates a conflict of interest. They'd be able to take a US company they manage and turn it into a foreign subsidiary they own. This would also make joint ventures, mergers, and acquisitions far more difficult and complicated, if not impossible.

onraglanroad 10mo ago
> If companies can't own companies, then instead I have to directly transfer ownership over the subsidiary to the shareholders of the primary company. That sounds fine to me. They're different companies. Why shouldn't I be able to sell my shares in Amazon UK while keeping them in Amazon France? Or countries could come to some agreement on cross country companies. Your last paragraph is pretty meaninglessness. In all those circumstances two companies just become one.

fsckboy 10mo ago

banning corporate ownership of other companies would dramatically decrease the value of companies that people own. it would be much more difficult to sell your company. you might have built a successful company over the course of your life, and your children don't want to run it. Other companies in the same business but perhaps not in the same regious are good candidates to buy it. There are far fewer individuals with the assets to purchase a successful company. should other companies wish to buy your company, they could still buy all the assets of your company, but not the company itself.