What type of business to form to allow 1 person (founder) total control with limited or no liability?


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What's the best way to setup a company whereby the founder always has control and the final word no matter how many partners he brings in? What are the disadvantages of the various setups?

Liability Sole Proprietorship Corporation

asked Jul 29 '11 at 15:09
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Tom Jones
24 points

1 Answer


2

So you have a range of options for keeping control. These will vary by legal system and country but in general:

  • Write it into the rules of the company. Anyone else buying in has to abide by the rules.
  • Always keep 51% for yourself. Only make the remainder available at all times thus you have final say on all votes.
  • Have 2 classes of shares "voting and non-voting" shares. Voting don't pay dividends but decide direction, non-voting pay dividends and you can distribute these how ever you like.
Key downside :

People who get involved in startups like to have control over their own destiny (almost regardless of the outcome) or at least be able to contribute to it ... your always holding control means they have lost one of the key motivators for joining you in the adventure.

The harder path Pick your partners well and keep the relationships strong between them, talk through everything and let everyone have their say. Collectively, on average, you will navigate better and work through more issues than you ever would alone ... but people need to have their say. Its harder to do, but better if you can work it that way.

answered Jul 29 '11 at 16:45
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Robin Vessey
8,394 points
  • Thanks! Will vote u up when I have the points! – Tom Jones 7 years ago

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Liability Sole Proprietorship Corporation