Understanding the reasons for corporate failures and the ways and means of stopping or rectifying such failures, is always of paramount importance. Some of the reasons that could cause corporate failures may include issues that relate to the equity ownership of the corporation, directorship and management of the corporation, structure issues ... etc.
The equity ownership of companies as a matter of fact and law takes different ways and forms, such as, family ownership or partnership ownership or equity shareholding ownership. Each of the mentioned categories has got, if we could say, it’s pros and cons.
Regarding family ownership, we have to mention that, many companies diminish or disappear from the scene after the first or the second generation establishing or starting the business. Failures could occur in family business due to lack of capital, business information shortage, lack of vision, conflict of interest or other reasons.
With reference to partnerships, being simple or general, the failure of the corporation could happen to differences between the partners regarding the business or future activities of the partnership. Lack of industry or good market or business. The partners or one of them, also, may face some financial or logistical problems that affect his \ her role or involvement in the company.
Equity shareholding companies are not free from such instances and they face certain difficulties regarding ownership of the company. This is obvious from the fact that we seldom notice the involvement of most shareholders in the activities or affairs of the company. Many shareholders are completely ignorant about what is happening in their company and this attitude, in certain cases, led to the failure of the company.