Is Entrepreneurship for you?

Factors you need to consider are your background, you financial and personal resources, your knowledge of people and their needs and desires, and your general attitude toward business and life.

One important area over which you have no control is your own personality and background. Is there such a thing as an entrepreneurial personality? It seems so. Certain traits of character and background occur over and over again in successful entrepreneurs. “Business Week” found, for example, that most come from homes where at least one parent was self-employed. Most showed entrepreneurial instincts very early. Nearly two thirds were the eldest child in their family; three quarters are married; half started a business because they disliked working for others.

background – биография, происхождение

traits of character – черты характера

Business Week – название газеты – Бизнес Уик

entrepreneur – предприниматель

Text 2

Pre-reading task

a) Discuss the following questions before reading the text.

1. Have you ever heard companies’ names starting with “OOO”, “OAO”? Do you know what these abbreviations mean? Are there such companies in oil and gas sector? What are they?

2. Have you ever seen English abbreviations “plc”, “Inc.”, “Ltd”? Do you know what they mean? Do you think the types of companies are the same in every country?

b) Key words: joint stock company, Charter, statutory, grant, share, shareholder, private, public.

Look up the key words in the dictionary to find out the exact meaning. Write them out.

Reading joint stock companies

A joint stock company is an association of people who contribute capital to conduct a business and agree to share the resulting profits or losses.

The first joint stock companies appeared in English trade a long time ago. The Muscovy Company, whose object was to open trade relations with Russia, was formed in 1553; The East India company, which had the monopoly of British trade in the East Indies and which was the beginning of Britain’s Indian Empire, got its charter in 1600; The Hudson’s Bay Company began its trade in furs with the North American Indians in 1670. But the joint stock company, as we know it was developed mainly at the time of the Industrial Revolution with the need for capital to exploit the inventions and consequent trade expansion of the time. It was to guide this development that the various Companies Acts were passed.

There are three ways in which a joint stock company can be set up:

1) By Royal Charter as, for example, the Bank of England, the Hudson’s Bay Company and the East India Company.

2) By special Act of Parliament. In this category come the so-called statutory Companies which are given the monopoly of some public utility service in certain areas, e.g. railway and canal companies, or most of the gas, water and electricity companies. They are granted special privileges and rights. On the other hand, they are subject to restrictions which protect the consumer.

3) By registration under The Companies Acts. This is by far the most usual way, and the great majority of companies are formed by registration, these companies may be of two types-the private limited company and the public limited company.

Private Limited Companies.

A private limited company, as the name suggests, is a private company which is not allowed to appeal to the public to take up shares. A private limited company should be registered under the Companies Act and act in compliance with its Charter. As a rule, it is exempt from sending accounts to the Registrar. However, it must send every year statement to the Registrar certifying that no invitation has been made to the public to subscribe shares or debentures. Private companies are often family affairs and the capital is raised and the shares are held among the members of the family. The right to transfer these shares is restricted; it can be done only with the consent of other shareholders. Obviously, this is a grave disadvantage for the shareholder in a private company. As every share carries one vote he must hold at least 51 percent of the shares in order to have the majority required for the transfer of shares.

Public Limited Companies.

Public limited companies, though not so numerous as private companies, have far more capital invested in them. It is a union of investors called shareholders. It carries out business on the basis of the Articles of association and is to be registered under the Companies Act. Any legal person or an individual can be a founder of a company. The shareholders are not liable by the company’s obligations. The public limited company is the most stable kind of unification of capitals, as the resignation of any of its investors does not involve the liquidation of the company. The investor has a right to sell his shares without consent of other shareholders. The initial share capital is formed by way of selling shares. This capital is used for the purchase of land, industrial premises and offices, equipment materials to launch manufacturing activities. Therefore the company receives an income and also can be financed by way of issuing debentures and securing bank loans.

The shareholders have property and personal rights. Property rights are realized in case of liquidation of a company and in case of getting dividends. Personal rights mean the rights to vote; normally a share gives a right for one vote. The decisions are to be taken by a large majority, hence the person or a legal person holding the majority interest is the one who makes resolutions. Public limited companies’ names must have the abbreviation “plc” in their name.

Comprehension check

I. Can you say that your ideas of different company types were right? What new information did you learn reading the text?

II. Answer the following questions.

1. When did the first joint stock companies appear in English trade?

2. What early joint stock companies do you know?

3. What are the advantages and disadvantages of the statutory companies?

4. What is a private limited company?

5. What kind of abbreviation must private limited companies have in their names?

6. What factor provides for the close character of the private limited companies?

7. What are the circumstance limiting financial rights and production opportunities of the private limited companies?

8. What is the public limited company?

9. Who can be the founder of the public limited company?

10. Are the shareholders liable by the company’s obligations?

11. What is the role of the initial capital for the public limited company?

12. How can the shareholders of the public limited companies realize their property rights?

III. Complete the sentences.

1. The members of a joint stock company agree to share both … and …

2. First joint stock companies came into existence in …

3. The principle aim of early joint stock companies was to …

4. A joint stock company … in three ways.

5. Statutory companies are formed by …

6. A private limited company needn’t …

7. If you are a member of a limited company, you can’t … … of other shareholders.

8. If any of the investors of a public limited company resigns, it does not …

9. Two more ways of raising money in a public limited company are …

10. Personal rights of the shareholders mean …

IV. Translate into English.

1. Акционерные компании появились ещё в 16 веке.

2. Компании, работающие в определённых сферах, часто создаются специальными законами.

3. Правительство предоставляет компаниям- монополиям права и привилегии, но также налагает на них ограничения.

4. Уступка доли участия возможна только с согласия акционеров компании.

5. Акционеры подвергаются риску обесценивания акций.

6. Открытая акционерная компания – это наиболее устойчивая форма объединения капиталов.

7. Деятельность закрытой акционерной компании не подлежит публичной отчётности.

8. Держатель контрольного пакета акций в компании принимает важные решения.