The Pleasant Perks of Proprietorships Are Lost When Investors Own Stock

Setting executive compensation and health and retirement benefits.*

Determining policies regarding vacations and company subsidies.*

Determining the amount to be invested by the company on research.*

Setting the amount to be spent on staff training and education.*

Acquiring other companies on terms agreed with the sellers.*

Setting company policies regarding expense account limitation.*

Determining policies regarding customer entertainment expenses.*

Setting the amount spent on marketing and the forms of marketing.*

Choosing the location of company facilities, meetings and retreats.*

Deciding the expense of furnishing offices, including the purchase of art.*

Creating employee benefits such as gyms, meals and travel terms.*

Creating both maternal and paternal parental leave birth time off benefits.*

Offering spousal or partner survival income benefits.*

Agreeing to partially pay student loan obligations.*

Agreeing to pay commuting expenses of executives and other employees.*

Deciding the number and quality of cars provided executives.*

Choosing all personal and professional advisors and terms of retention.*

Selecting and changing law, accounting firms.*

Practicing nepotism and hiring family members on overly expensive terms.*

Supporting charities and causes of the owner’s choosing.*

* Without discussion with or approval from affect any governing board.

The above actions can adversely impact reported profit as well as the morale and attitudes of executives and staff, and may not be in the best interest of the company’s owners.

However, while investors who have bought royalties, providing an entitlement to an agreed percentage of the company’s revenues for an agreed period, may not agree with the above polices or decisions, they are not really concerned, because they hold no ownership interest in the company and are not materially affected by the effect of profitability on company valuation.

Royalties are the better way of investing in and financing privately-owned companies.



Arthur Lipper, Chairman
British Far East Holdings Ltd
858 793 7100

© Copyright 2019 British Far East Holdings Ltd. All rights reserved.

Blog Management: Viktor Filiba



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