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Understanding Sleeping Partners in Business

A sleeping partner is someone who invests capital in a business but does not participate in its day-to-day management. They have a right to a share of the profits but no involvement in running the company. While partnerships allow for specialization of roles and pooling of capital, disputes can arise over decisions and effort contribution of each partner. Non-executive directors are members of a company's board who are not employed by the company but provide independent advice and criticism. They bring experience, knowledge, and impartiality to focus on board-level matters rather than executive operations. However, non-executive directors have the same legal duties and responsibilities as executive directors.

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Thuy Tien Nguyen
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522 views1 page

Understanding Sleeping Partners in Business

A sleeping partner is someone who invests capital in a business but does not participate in its day-to-day management. They have a right to a share of the profits but no involvement in running the company. While partnerships allow for specialization of roles and pooling of capital, disputes can arise over decisions and effort contribution of each partner. Non-executive directors are members of a company's board who are not employed by the company but provide independent advice and criticism. They bring experience, knowledge, and impartiality to focus on board-level matters rather than executive operations. However, non-executive directors have the same legal duties and responsibilities as executive directors.

Uploaded by

Thuy Tien Nguyen
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Sleeping Partner Someone who invests capital into a business, but plays no part in the running of it.

Who invests in the business but does not have dealings in the day to day running of the enterprise. A person who has invested money in a new company and has a right to a share of the prots but does not take part in managing it. Oxford Dictionary Adantages The main advantage of a partnership over a sole trader is shared responsibility. This allows for specialisation, where one partners strengths can complement anothers. More people are also contributing capital, which allows for more exibility in running the business. There is less time pressure on individual partners. There is someone to consult over business decisions Disadvantages The main disadvantage of a partnership comes from shared responsibility. Disputes can arise over decisions that have to be made, or about the eort one partner is putting into the rm compared with another. The distribution of prots can cause problems. The deed of partnership sets out who should get what, but if one partner feels another is not doing enough, there can be dissatisfaction. A partnership, like a sole trader, has unlimited liability [Unlimited liability: Owners are personally liable for all debts. //[Link]/schools/gcsebitesize/business/aims/[Link] Non Executive Director A member of a company board of directors who is not employed by the company but takes part in meetings of the board and provides independent advice: She claims that the role of the independent non-executive director is to challenge [Link] Dictionary Essentially the role of a non-executive director is to provide what could be called a creative contribution to the board of directors by giving objective criticism and advice. Non-executive directors are expected to focus on board and not stray into executive directions. In so doing they should provide an independent view of the company, distinct from its day-to-day operations. Non-executive directors therefore are appointed to bring to the board: (a) independence (b) impartiality (c) wide experience (d) specialist knowledge (e) personal qualities There is no legal distinction between executive and non-executive directors. As a result non-executive directors essentially have the same legal duties, responsibilities and potential liabilities as their executive colleagues. [Link] 1

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