Section III. Legal matters Unit 3.1. Company law

3.1.1. Characteristics of a Company

A company is regarded in law as being a separate legal ‘person’. This means that it has rights separate from its owners and managers to enter into contracts, employ people, own property and conduct business.

The largest number of incorporated companies are incorporated with limited liability, being limited by shares. The potential financial liability of a member (in other words shareholder) in such a com­pany is limited to the amount, if any, remaining unpaid on the shares held by that particular member. Such a company is known as a limited company and will have the word ‘Limited’ at the end of its name.

A company can be a private or a public company. A public company must have a minimum issued share capital of £50,000. A public company may offer its shares for sale to the public, whereas a private company must not. A public company may also have its shares listed (and traded) on the Stock Exchange. Information on the current values of such listed shares is publicly available and can be checked for instance in The Financial Times.

Characteristics of a limited liability company

• A limited company has a separate legal personality in law.

• A company is owned by shareholders, management decisions primarily being made by directors.

• Shareholders (members) and directors have limited liability.

• A company must be registered at the Companies Registry.

• A shareholder’s personal liability is limited to paying fully for shares held.

• A company’s nominal (or authorized) share capital refers to the quantity of shares a com­pany is authorized to issue.

• A company’s issued share capital refers to the value of shares actually issued to shareholders.

• A company’s paid-up share capital refers to the amount of the total (nominal) value of the issued share capital actually ‘paid-up’ by shareholders.

There are various types of shares which a company can issue, including:

1. Ordinary shares ─ usually carrying voting rights and a right to any dividend declared by the company (i.e. share of any profits made by the company).

2. Preference shares ─ which do not carry voting rights (referred to as non-voting shares) but provide priority to payment of a dividend.

Vocabulary notes

Limited company ─ a company whose members are only responsible for its debts up to a limited amount, usually the amount of unpaid shares.

Listed shares ─ securities that are recorded on the official list produced by a stock exchange.

Assignments

I. Memorize the following words and phrases:

incorporated company	об’єднана компанія
limited liability	обмежена відповідальність
current values	поточні ціни
personal liability	особиста відповідальність
issued share capital	випущений акціонерний капітал
paid up share capital	сплачена частина акціонерного капіталу
ordinary shares	звичайні акції
preference shares	привілейовані акції
nominal/ authorized capital	акціонерний капітал, дозволений для випуску
voting right	право голосування
non- voting shares	акції без права на більшу кількість голосів під час голосування
listed shares	акції, курс яких вказано в офіційному списку цінних паперів, які котируються на основному ринку фондової біржі
limited company	компанія з обмеженою відповідальністю

II. Answer the questions:

1. What is meant by ‘limited liability’?

2. What are the characteristics of a limited liability company?

3. What is the minimum amount of issued share capital which a public company must maintain?

4. Who makes management decisions?

5. What is meant by ‘a company’s nominal share capital’?

6. What is meant by ‘a company’s issued capital’?

7. What does the term ‘paid-up share capital’ refer to?

8. Distinguish between public and private companies.

9. Distinguish between ordinary and preference shares.

10. What does the term ‘legal person’ mean?

11. What is meant by ‘listed shares”?

III. Complete the following sentences by entering an appropriate multi-word verb into blank space from the selection in the panel below.

went against	negotiate with	act for
appeal against	decide against	enter into

1. The Defendant has decided to ________ _________ the judgment.

2. The judgment___________ ___________ my client.

3. We are confident that the Judge will_______ ________ our opponent.

4. He wants to _________ _________ discussions with a view to becoming a director of the company.

5. He intends to _________ _________ the company to purchase some shares.

6. I have been asked to _________ _________ a newly incorporated company.

IV. Translate into English:

Компанія з обмеженою відповідальністю ─ це компанія, у якої відповідальрість її членів за борги компанії обмежена. Вона може бути обмежена їх акціями. У цьому випадку розміри відповідальності партнерів при ліквідації компанії обмежуються розмірами невиплат по цим акціям.