3. Complete the text using the words:

shareholders, capital, amount, a factory, place, issue, annual, rights and duties, public

Founding a Company

Founders of companies have to write a Memorandum of Association (меморандум об ассоциации \ заявка на регистрацию акционерного общества), which states the company’s name, purpose, registered office or premises and authorized share 1) … .

Premises – is the technical term for the 2) … in which a company does its business: an office, a shop, 3) …, a warehouse, etc. Authorized share capital means the maximum 4) … of a particular type of share the company can 5) … .

Founders also write Articles of Association (устав компании), which set out the 6) … of directors and different classes of 7) … . Company’s Memorandum, Articles of Association and 8) … financial statements are sent to the registrar of companies, where they may be inspected by the 9) … .

4. Write the questions about Annual General Meetings to which these are the answers:

1) … ? All the shareholders.

2) … ? No, only the shareholders with voting shares. Sometimes there are categories of shares that don’t give their holder voting rights.

3) … ? To approve (or reject) the company’s accounts, and the auditors’ and directors’ reports of the year’s activities; to elect (or re-elect) directors and auditors for the coming year; and to vote on the size of the dividend that will be paid.

4) …? The company generally sends them the Annual Report before they come to the meeting.

5) …? They can be represented by proxy (уполномоченный); that means they can nominate someone else to attend a meeting and vote for them.

6) …? There has to be a quorum – a minimum number of directors and shareholders present to take decisions.

The following question starters may help you:

1) Who can … ?

2) Are all the shareholders entitled (имеют право) to … ?

3) What is the purpose of … ?

4) What information … ?

5) What happens if … ?

6) How many … ?

5. Read the dialogue and translate it into Russian.

Jim – Hi, Alice. How are you getting on?

Alice – Fine, as usual, thanks, Jim. What about you?

J – I’m OK, it’s nice to see you.

A – I’m glad you are not in a hurry and we have time to talk today.

J – Sure.

A – Can you give me a piece of advice?

J – Well, I’ll try if I can.

A - You know I’ve been always good at cooking and I’m thinking of starting my own business – a café.

J – It might be a good idea.

A – I guess I must learn about responsibilities of going into business.

J - Are you going into this business by yourself?

A – Exactly. I’d like to have a café with my name on it where I make the decisions and where I control the profits.

J – You seem to be resolute so I’ll try to help you. If you go into business alone, it is called sole proprietorship. You can start or you can stop it whenever you like.

A – It sounds encouraging. What else can you tell me?

J – There is no need to consult partners or a board of directors. So you can put your ideas into effect quickly. You decide on your vocation, salary, hiring and firing.

A – Well, that is not bad.

J – Wait a moment. I should tell you about the risks.

A – What do you mean?

J – First of all, the most important risk is that you have unlimited liability. It means that you are responsible for all your business debts.

A – So, if the business fail, I’ll have to declare personal bankruptcy, won’t I?

J – That’s what I mean. You can use your personal assets.

A – Oh, what other things should I know?

J – You will also have to higher a good book-keeper if you can’t do your books yourself.

A – I have to think all the information over again.

J – Certainly. I’ll be always glad to help you.

6. Answer the questions.

1. What kind of business is Alice thinking of?

2. Is it going to be a sole proprietorship? Why?

3. What are advantages and disadvantages of this kind of business?

4. What else should Alice think of?

7. Read the text and translate it into Russian.

Financial Statements

Companies are required by law to give their shareholders certain financial information. Most companies include three financial statements in their annual reports.

The profit and loss account (отчет о доходах и расходах) shows revenue and expenditure. It gives figures for total sales or turnover (the amount of business done by a company during the year), and for costs. The first figure should be greater than the second: there should generally be a profit – an excess of income over expenditure. Part of the profit is paid to the government in taxation, part is usually distributed to shareholders as a dividend, and part is retained by the company to finance further growth.

The balance sheet (балансовый отчет) shows the financial situation of the company on a particular date, generally the last day of its financial year. It lists the company’s assets (активы), its liabilities (пассивы), and shareholders’ funds. Business’s assets consist of its cash investments and property (buildings, machines, and so on), and debts – amounts of money owed by customers of goods or services purchased on credit. Liabilities consist of all the money that a company will have to pay someone else, such as taxes, interest payments, as well as money owed to suppliers for purchases made on credit, which are grouped together on the balance sheet as creditors.

The sources and application of funds (источники и использование средств) show the flow of cash in and out of business. Sources of funds include trading profits, the sale of assets and issuing of shares. Application of funds include the purchase of assets, the payment of dividends and the repaying of loans, and, in a bad year, trading losses.