Unit 35 Business Organizations in the uk

Before you read

Discuss these questions.

1 What does the phrase “doing business” mean?

2 What multinational companies do you know?

3 What types of companies would you prefer to work for?

Company Types in the uk

Read the text. Consult “Business Vocabulary” for unknown words.

There are three basic types of businesses in Great Britain:

1 Sole trader- the oldest form of business. It means that there is only one (sole) owner, e.g. doctor, solicitor, hairdresser, garage man, estate agent.

2 Partnership is a firm where there are a few partners. They are firms of architects, lawyers, auditors, consultants, etc.

3 Limited liability company – llc.

In the UK the most common type of organization is a company limited by shares - a limited liability company. Each company of this type is a separate "legal persona" (that means it can contract as a separate person), and the liability the company is limited to the nominal value of the shares. So, if a company goes into liquidation because of its debts, each member may have to lose the cost of his shares, but no more. If the company is limited by guarantee, the liability of each member is limited to the amount he has personally guaranteed (promised) to pay in the event of liquidation.

Companies may also be public or private. About 97 per cent of the limited companies registered in Great Britain are private companies. A private company is one which restricts the right to transfer its shares, limits its members to fifty (but has a minimum of two), and must not invite the public to subscribe for its shares and debentures.

A public limited company (PLC) can offer its shares and debentures to the public; there is no limit to the right of its members to transfer their shares to other persons. There is no limit to the total number of members except that there must be at least seven.

Other types of companies are as follows:

Joint-stock company. In Britain it is a form of business organization called a corporation, which has its capital devided into many small units of stock or into shares of low face value so that they may be bought by small and large investors. Joint-stock companies are set up by royal charter, or Act of Parliament, or by registration under the Companies Act. In the USA it's a business organization having its capital devided into small units of stock, but the liability of its members is unlimited, as in partnership (see The USA business organizations).

Holding company. In Britain, it is a company that has been formed for special purpose of holding the whole, or more than a half, the share capital of one or more other companies called subsidiary companies. In the USA this is called a pure capital holding company, while an operating holding company is a company which operates a business (i.e. trading), and also holds more than a half the capital of one or more other companies.

Trading company. a) A limited company which is actively trading, i.e. buying and selling products and services for profit, unlike a non-trading company such as holding; b) A company the business of which is that of a trader, i.e. buying other producers' products and selling them for profit, as distinguished from manufacturing or mining company, or a company offering service such as banking, insurance, etc. Syn. commercial company.

Investment company/Investment trust company. A limited company that uses its capital to buy securities as investments, hoping to make a profit from dividends and interest received and from capital gains on sales of securities. Such companies are often called investment trusts, although they are seldom real trusts.

The companies can also be subsidiaries, affiliates, associated companies, sister or daughter companies:

Subsidiary. More than half share capital of such company is owned by another company called either a holding company, or a parent company. The subsidiaries of the same holding or parent company are said to be affiliates, or associated companies.

Affiliate. A company which is partly or wholly owned by another company is said to be an affiliate of the owning or holding company and of all other companies of the group. Syn. related company.

Associated company. A company of which at least 20% but not more than 50% of the equity is held by another company or group of companies.

Sister company is one or more subsidiary companies in the same group, or under the same holding company.

Daughter company is a subsidiary company of a parent or holding company.