Corporation

shares of ownership – доли собственности

stock certificate – акционерный сертификат

shareholder / stockholder – акционер

limited liability– ограниченная ответственность

private limited company- закрытое акционерное общество;частная компания

с ограниченной ответственностью

public limited company- открытое акционерное общество, общество с ограниченной

ответственностью

general public– широкая общественность

Stock Exchange- фондовая биржа, биржа ценных бумаг

market value– рыночная, курсовая стоимость

expiry of the charter- окончание, истечение срока действия устава

provincial government– местные власти

A corporation is a business owned by a few persons or by thousands of persons. A business corporation is an institution established for the purpose of making profit. The shares of ownership of the members of the corporation are represented by stock certificates. A person who owns a stock certificate is called a shareholder or a stockholder. The stockholders do not directly manage the corporation; they elect a board of directors to represent their interests. The board of directors selects the president and vice president, who manage the corporation for the stockholders.

The key factor in owning any company is the guarantee called limited liability: the owners of a company never have to pay more than they have invested in the company. Their liabilities are limited. When a company goes bankrupt, the owner can never be required to pay its unpaid bills. That is why corporations are also referred to as limited companies. A limited company may be private or public. Many countries make a clear distinction between public and private companies. If it is a private limited company, a shareholder can only sell shares if all the other shareholders agree. In some countries, a large company is said to be privately owned if its shares are not available to the general public. If it is a public limited company, shares can be bought and sold freely, usually at Stock Exchange. The price you pay at the Stock Exchange (or to a shareholder) for your shares is their market value.

There are several advantages of the corporate form of ownership.

Limited companies are less risky from an owner’s point of view. If the company fails, it will stop trading and go into liquidation. This means that all the company’s property and equipment (its assets) must be sold and the money from the sale will be used to pay all its debts to its creditors. The shareholders may loose the money they paid for the shares. But the personal assets of the owners are protected from the creditors of the company. In other words, the shareholders’ liability for debts is limited to the value of their shares.

The next advantage of corporation is the ability to attract financial resources. Corporation attracts a large amount of capital it can invest in plants, equipment and research.

Corporation can offer higher salaries and thus attract talented managers and specialists.

Limited companies do not end with the death of owners. It can terminate only by bankruptcy, expiry of its charter, or majority of its shareholders.

Disadvantages

It is more expensive and complicated to establish corporations than proprietorships or partnerships. A charter, which requires the services of a lawyer, must be obtained through provincial government or the federal government.

Limited companies are subject to federal and provincial income taxes. Limited companies are taxed twice: on the profits they earn and on the dividends which come out of the profits.

WORD STUDY

Ex. 18. Study the different meanings of the word share and use it to translate the sentences.

share (n) 1) доля, часть; квота

to have a share in the profits — иметь долю в прибыли

lion’s share – львиная доля

2) участие; роль

3) акция; доля, пай

sharesarerising— акции поднимаются (в цене); курс акций растет [поднимается]

sharesaredown— акции падают (в цене); курс акций снижается [падает]

to issue shares — выпускать акции

share(v) 1) делить, распределять; разделять

2) делиться

3) разделять (что-л. с кем-л.) ; использовать совместно

4) разделять (мнения, вкусы и т. п.)

1. I share your opinion.

2. The Charter should include an agreement on how profits and losses are to be shared.

3. When the company has a sound financial condition its shares are usually rising in the market.

4. It is the very largest billion dollar corporations that get the lion's share of the armament

contracts.

5. All of us had a share in making the decision.

6. I’m not a man to share my problems with anybody.

7. After their father’s death the money were equally shared between two brothers.

8. Bill and I shared an office for years.

9. His share in the authorized capital (уставный капитал) was 20 percent.

10. I saw that John was very hungry and decided to share my sandwich with him.

Ex. 19. Match the words with their definitions.

_____ partnership	a. going into business for oneself
_____ sole proprietorship	b. a company whose owners enjoy limited liability for the company's debts and losses
_____ corporation	c. a limited company that does not issue shares for general public
_____ limited company	d. a place where shares are regularly traded
_____ public company	e. two or more partners working together for profit, without limited liability
_____ private company	f. limited company whose shares may be purchased by the public and traded freely on the open market
_____ shareholder	g. any of the equal parts into which the capital stock of a company is divided
_____ a share	h. the share of a cooperative society's surplus allocated at the end of a period to members
_____ assets	i. the owner of one or more shares in a company
_____ dividend	j. any property owned by a person or firm
_____ charter	k. the state, condition, or quality of being or becoming bankrupt
_____ Stock Exchange	l. organization operating to make profit
_____ bankruptcy	m. the fundamental principles of an organization;

Ex. 20. Generate other forms from these words.

	ownership
to imagine
to refer
		practical
	coverage
		retired
to agree
to specify
	attraction
		willing
to pay
	protection
to profit

Ex. 21. Find in the texts equivalents to the following Russian words and word-combinations.

1. торгово-промышленная корпорация ________________________________________

2. совет директоров ________________________________________________________

3. обанкротиться __________________________________________________________

4. прекратить существование ________________________________________________

5. личное имущество _______________________________________________________

6. привлекать финансовые ресурсы ___________________________________________

7. учреждать корпорацию ___________________________________________________

8. подоходный налог _______________________________________________________

9. управлять корпорацией напрямую __________________________________________

10. являться объектом налогообложения _______________________________________

Ex. 22. Fill in the gaps with the words and word combination from the box.

shares, agreement, liability, to dissolve, general, rights and obligations, shareholder, public, Stock Exchange, entity, liquidation, private, to establish, additional capital

1. Partnerships are created by an__________________, oral or written, which expresses the

_______________________________of each partner.

2. It is also easier for partnerships to obtain ________________________________.

3. Partnerships are not as easy _____________________ as sole proprietorships.

4. Partnerships are a stronger ______________ than proprietorships.

5. If it is a public limited company, ______________can be bought and sold freely, usually at

________________________.

6. When the owners of the partnership have unlimited________________ they are called

___________________ partners.

7. A limited company may be ______________ or ________________.

8. If the company fails, it will stop trading and go into _____________________.

9. A person who owns a stock certificate is called a _____________________.

10. It is more expensive and complicated __________________corporations than proprietorships

or partnerships.

Ex. 23. Make up sentences with the jumbled words.

1. common /is /partnership /the most /form /general /the

2. protected /partners’ /by /interests /”Agreement of Partnership” /can / an / be

3. to lend /than /are /creditors / proprietorships /money /more willing /to /to /partnerships

4. shares /company /freely /in /can be /sold /limited /a public /and /bought

5. do not /the /companies /end /owners /of /limited /death /with

Ex. 24. Choose the best alternative to complete each sentence.

1. If a company needs to raise a lot of money , it may _________ shares.

a. put up b. issue c. supply d. purchase

2. Pension _______ play an important role in the stock market.

a. companies b. trusts c. societies d. funds

3. As an ordinary shareholder, you are ________ to vote at the meeting.

a. entitled b. titled c. nominated d. persuaded

4. The share _______ reflects the general activity of the market.

a. indication b. index c. measure d. indicator

5. A _______ is someone who buys shares, expecting the market to rise.

a. bear b. bull c. dog d. stag

6. A _______ is someone who expects share prices to fall.

a. bear b. bull c. dog d. stag

7. A _______is a person who buys new issues of shares hoping to sell them quickly as profit.

a. bear b. bull c. dog d. stag

8. First class risk-free shares issued by big well-known corporations are often known as _____.

a. bonds b. blue chips c. debits d. golds

9. What kind of _______ can I expect on my investments?

a. reward b. prize c. surplus d. return

10. The higher the risk you ________, the more money you can make.

COMPREHENSION

Ex. 25. Multiple choice. In each of the following, select the word pr phrase that best

completes the statement or answer the question.

1. One advantage of the sole proprietorship form of business organization is that

a. it is easy to raise capital

b. it has unlimited liability

c. there is limited life of the business

d. there is no sharing of profit

2. The legal form of business organization that has only one owner is known as

a. a sole proprietorship

b. a partnership

c. a cooperative

d. a limited company

3. A sole proprietorship is also referred to as _______________

a. single proprietorship,

b. individual proprietorship,

c. individual enterprise

d. all of the above

4. The only legal requirements for starting one-man business is __________________

a. an ”Agreement of Partnership”

b. a Charter

c. municipal and registration licenses

d. oral permission from local authorities

5. One advantage of corporate form of business organization is that

a. the number of government regulations is small

b. there is unlimited liability

c. there is easy transfer of ownership

d. taxes are low

6. One advantage of the corporate form of business ownership is that

a. it has limited liability c. it requires sharing of ownership

b. in has unlimited existence d. it must comply with a number of government regulations

7. A corporation that sells shares to the public is known as a

a. private corporation c. nonprofit corporation

b. government corporation d. public corporation

8. A law firm might easily be organized as a

a. partnership

b. sole proprietorship

c. cooperative

d. private corporation

9. Two partners operating a small amusement park with high-risk rides should consider changing

their current partnership to a

a. sole proprietorship

b. limited partnership

c. private corporation

d. cooperative

10. The most common form of business organization for a small business is

a. the corporation

b. the cooperative

c. the sole proprietorship

d. the partnership

DISCUSSION

1. Give your reasons that “ease of discontinuance” is an advantage of the proprietorship form of

legal organization.

2. Is the owner of a small corporation as “free to make all decisions” as a single proprietor?

Explain.

CASE STUDY

Finding A Partner

Five years ago, Nick Page set up his own business, making hand-made furniture. It was a hard struggle at first; but for the last year he has bad so many orders that he cannot cope with them.

Six months ago, Nick obtained an £8,000 bank loan to buy some modern machines. Although the machines helped him to produce more furniture, the number of orders continued to rise, so that he still could not keep up with them.

Nick decided that the only solution was to take on a partner who would be able to share the work and invest some money in the business to pay off part of the bank loan. He put the following advertisement in the local newspaper.

WORKING PARTNER required for hand-made furniture business. Experience and capital needed. Send full details Box 6249

Tree days later he received a reply.

Seaview Rambold Westshine Dear Sir, I was very interested in your advertisement in the Westshine Gazette for a partner in your furniture business. For twelve years I run my own hand-made furniture business in East Anglia, but I had to give it up. I am now working in a furniture factory in Ambleside, where I have been unemployed for two years. I could show you some photographs of the furniture I made when I had my own business, or you are very welcome to inspect the examples I have in my home. It would be possible for me to invest small amount of money in your business. If you are interested, I would come to see you. Yours faithfully, John Reed

The Meeting

Nick asks John Reed to come to the workshop. John is 20 years older than Nick, but they get on well together from the start.

John's photographs of his furniture show that he is a very skilled worker. He is also full of ideas about new kinds of furniture they could produce.

During their long talk, John reveals why he had to give up working for himself. A solicitor had cheated him out of thousands of pounds profit from his business.

Nick is very keen to have John as a partner. However, when they discuss the terms of the partnership, they run into problems.

John says he is willing to invest £3,000; but he wants 50 per cent of the profits because he has had much more experience. John also says that he is not very keen to have a deed of partnership drawn up by a solicitor, because of his bad experience with the solicitor in the past.

ACTIVITIES

Questions 1. What are the three most important points that should be included in a

partnership agreement?

2. What actions would you advise Nick to take?

Role play Find a partner. One person takes the role of Nick; the other the role of John.

Nick should try to persuade John to change his conditions for the partnership.