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The simple reason why it has not been done is that the legal vehicle for it did not exist prior to 2001.

Remember Joni Mitchell's refrain in "Big Yellow Taxi"?

"You don't know what you've got 'til it's gone"

Well, the LLP is the converse: you don't know what you haven't got 'till you see it.

Or as the Scots would have it:

"Ye dinna ken wut ye've not 'til it's yon".

Once the stakeholders (not the managers) catch on to the fact that the optimal enterprise model may well be to combine a cooperative of service providers with a cooperative of service users, then things may start to happen.

And it then won't be long before managers come on board as revenue sharing "managing partners" whose interests are now aligned with other stakeholders, since the "Principal/Agency" problem of all Companies does not exist with an "Open Corporate".

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Sep 28th, 2006 at 10:46:00 AM EST
[ Parent ]
What came first historically? The stock market or the PLC legal vehicle?

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Thu Sep 28th, 2006 at 10:50:13 AM EST
[ Parent ]
I think people started to trade shares - probably in coffee houses etc - in "Joint Stock Limited Liability Companies" and then later on a distinction of "Private" companies (with certain pre-emption rights) came along.

The beauty for an Investor of "Equity Shares" - as I call proportional shares in the GROSS revenues of enterprises - is that you get to share in the revenues BEFORE the management gets its hands on it.

Would you rather drink the water before it goes into the bath, or after it comes out of the plughole?

It is this "Pre-distribution" which makes units in "Income Trusts" and "Royalty Trusts" so popular in Canada with long-term investors.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Sep 28th, 2006 at 11:51:52 AM EST
[ Parent ]
I am still wondering what incentive is there for the capitalists to include workers and clients in the arrangement.

Shareholders could just convert their capital shares into capital+revenue shares. The winners would be the capitalists, the losers would be the managers, and workers and clients would be in the same position as now.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Thu Sep 28th, 2006 at 11:58:03 AM EST
[ Parent ]
It's about sharing risk and reward. In a conventional company, the shareholder "capitalist" runs the risk that his agents - the Directors and managers - make off with the lion's share (remember Enron?) and that he gets little or nothing.

In this model - for the first time - the Capital User and the Capital provider "co-own" productive assets and share the revenues or production from them - if there is any.....

This "Capital Partnership" is - I believe - optimal in its balance of risk and reward.

Stakeholders such as workers, suppliers and clients are either "outside the box" with a legally binding contract (and represent an "overhead" or a "cost" to be "cut" wherever possible) or could come "within the box" so that their relationship is governed by a consensually negotiated agreement rather than a conflicted and adversarial one.

It may not be possible for the stakeholders to come to an agreement, of course, due to differences in expectations but if they cannot come to a consensual agreement then one party certainly could not IMPOSE agreement on the other.

My experience is that enterprises may become viable using a partnership model which are not viable any other way.

But some enterprises are not viable under ANY circumstances, of course.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Sep 28th, 2006 at 12:59:27 PM EST
[ Parent ]

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