Allegiance Commercial Real Estate Services

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Allegiance Commercial Real Estate Services

Allegiance Commercial Real Estate Services

Hypothetical Situation

You work at Allegiance Commercial Real Estate Services and overhear a conversation in the lunch room. where a female executive assistant confides to her friend that her boss (and yours), the Designated Broker for the company, intends to manipulate the new real estate listings with the company over the next 90 days to insure that he can take them with him without legal liability when he resigns and opens his own commercial real estate company. Your boss has already told you an aggressive sales agent. That you are part of his team and that he would like you to come with him as his senior executive.

(1) Do you advise your present employer?

I advice him not to go with him because the present employer is legally liable and the other one is not. First and foremost, the principal benefit of working via an illegal company has always been the limited liability bestowed upon the company's officers and shareholders. As a sole workr or other non-limited business, personal assets can be at risk in the event of a failure of the business, but this is not the case for a limited company (Etkind 2005). As long as the business is operated legally and within the terms of the Companies Act, directors or shareholders personal assets are not at risk in the event of a winding up or receivership. And as often happens on occasion, such events are not always under our own control. There is no obligation for a limited company to commence trading within any set time period after its incorporation (Ward 2003 ).

If a limited company becomes insolvent and is wound up only the assets of the company are used to try to clear its debts. The officers of the company have no personal liabilities and are not made bankrupt and are free to incorporate another company. The shareholders are liable only to the extent of any unpaid shares held which is rare. By contrast (Frost 2003), if you work as a partnership or as an individual, the creditors can claim on all your property to satisfy the debts, and if this is insufficient you may be declared bankrupt. An undercharged bankrupt is forbidden to start another business or to become a director of a limited company.

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