Файл: Н.П. Морозова Forms of business organization Формы организации предприятий (английский язык).pdf

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by U.S. business firms. This form of organization has five important characteristics:

-It’s an artificial person with specific legal standing;

-It has limited liability;

-The state gives it the power to conduct a specific type of business activity;

-It is owned by shareholders;

-Shareholders are liable for damages only to the extent of their holdings.

A corporation whose stock is owned by large numbers of public

investors is called a public corporation. The stock of these firms can be purchased on the open market by anyone.

Conversely, private corporations do not sell stock publicly.

If shares of a corporation are owned by less than 500 people or the company has under $ 1 million in assets, the firm is not required to publicly disclose its finances unless its stock is traded on a national exchange.

Other types of corporations include : (1) the S corporation, which is permitted to have a maximum of 35 shareholders and may be taxed like a partnership; (2) the non-profit corporation, such as the Public Broadcasting System (PBS); (3) the subsidiary corporation, which is entirely or partly owned by another corporation called a parent company; and (4) the holding company, which is a type of parent company that provides little control over the subsidiary and merely holds its stock as an investment.

3.Answer the questions on the text:

1.What is a corporation?

2.Does a corporation have the same standing, rights and duties as an individual?

3.What percent of all money taken in by businesses do corporations account for?

4.Who is a corporation owned by?

5.Does a corporation have limited or unlimited liability?

6.To what extent are shareholders liable for damages?

7.What is a public corporation?

8.What do private corporations differ from public ones?

9.Do all corporations have to report their financial condition to the public?

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10.How many shareholders is the S corporation permitted to have and how is it taxed?

11.Are all corporations profit-making organizations? 12.What’s the name of the corporation which owns another?

13.How is the corporation whose stock is owned entirely or partly by another corporation called ?

14.Does the holding company provide much control over the subsidiary?

1.Match each type of organization on the left with its description on the right:

5. Cover the Type column, and from the description name the type of organization. Finally, cover the Description column, and try to describe each organization listed.

B

1. Words and expressions to be memorized: insurance - страхование

2. Read the following international words and give their Russian equivalents:

separation; director; person; percent; detail; effective; theory; recommendation; typically; role; act v.; select; prestige; reality; president; vice president; aspect; report v.; meeting; audit v.; normally; pension; fund; plan.

3. Read the text:

Separation of Ownership and Control

In a corporation, ownership and management are separate and the shareholders or owners of the company’s stock can vote to oust managers.

Although in theory shareholders are the ultimate governing body in a corporation, in reality they most often accept the recommendations of management. Furthermore, not all corporate stock carries voting rights. In the past 20 years, institutional investors such as pension funds and insurance companies have become quite influential because they own large numbers of shares. Such investors want the value of the stocks they hold to increase, and they have begun to play a greater role in governing the corporations they invest in.

At least once a year, all owners of voting shares are invited to a meeting to choose directors for the company, select an independent accountant to audit the firm, and attend to other business.

Until recent years only a few people would normally attend the annual corporation meetings. Most shareholders would vote on the

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election of directors and certain other highly important matters by “proxy”, that is by filling out a form and mailing it in authorizing management to vote on their behalf. Now, it is not unusual for several hundred to attend. Often they ask management penetrating questions.

The board of directors, which represents shareholders, has the job of guiding the corporation’s affairs. Typically, the board consists of 15 to 25 directors who vote on major management decisions.

The makeup and role of the board of directors varies from one company to another. In some corporations, the board of directors merely acts as a “rubber stamp” in approving management’s recommendations; in other firms, they make major policy decisions. Inсreasingly, only a minority of board members are internal officers of the corporation. Some directors are selected to give prestige to the board, others to provide certain skills or to represent lending institutions. It is not unusual for the same person to serve concurrently on several different corporate boards. The board meets monthly or quarterly to consider policy related to operational decisions and to review accomplishments. At annual meetings new directors are added as needed and major policy decisions are made.

The real power in a corporation usually rests with its chief executive officer (CEO), who is responsible for setting down the policies of the company under the direction of the board. The CEO typically appoints the other major corporate officers, who must also be approved by the board. They manage various aspects of the corporation and report to the CEO. The CEO may also serve as the chairman of the board, the president of the corporation or both. As long as the CEO has the confidence of the board of directors, he or she is permitted a great deal of freedom in the operation of the company.

Employees are increasingly becoming involved in governing the firms that employ them. One form of employee involvement is the employee stock ownership plan (ESOP), which encourages workers to buy shares of stock in the companies they work for. Since such plans often control large blocks of stock, workers receive a voice at shareholder meetings and may even be represented on a firm’s board of directors.

4.Answer the following questions on the text:

5.Are ownership and management separate in a corporation?

6.Can the shareholders vote to oust managers?

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7.Are shareholders the ultimate governing body in a corporation theoretically or in practice?

8.Does all corporate stock carry voting rights?

9.Why have institutional investors begun to play a greater role

in governing the corporations they invest in? 10. Who is the board of directors elected by? 11. What does it mean to vote by proxy?

12. What body has the job of guiding the corporation’s affairs? 13. How many directors does the board usually consist of? 10.How often does the board meet?

11.Do internal officers of the corporation represent a majority of board members?

12.Who does the real power in a corporation rest with? 13.Can the chief executive officer also be the chairman of the

board?

14.What is one form of employee involvement in governing the firms that employ them?

15.What does ESOP encourage workers to do?

1. Find out which definition on the right matches which word on the

2. For each word or expression in A find the one in B, which has the same meaning:

A.

1. to oust; 2. to attend to; 3. to accept; 4. matter; 5. to mail; 6. major; 7. to vary;8. to approve; 9. minority; 10.quarterly; 11. to rest with smb; 12. confidence;13. value; 14. encourage; 15. to govern; 16. concurrently; 17. annually.

B.

a) to be different; b) the smaller part; c) to post; d) to cause to leave; e) cost; f) to guide; g) to receive; h) to stimulate; i) to pay attention to; j) once a year; k) chief; l) to agree; m) at the same time; n) to be the responsibility of smb; o) affair; p) trust; q) every three months.

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1. Look through the text and find the English equivalents for the following Russian phrases:

отстранить руководителей; главный руководящий орган; стали довольно влиятельными; выбрать независимого квалифицированного бухгалтера; состав и роль совета директоров; должностные лица внутри корпорации; принимаются главные стратегические решения; реальная власть лежит на главном исполнительном директоре; до тех пор, пока главный исполнительный директор пользуется доверием совета директоров; такие программы часто контролируют крупные пакеты акций.

2.Fill in the gaps with prepositions:

3.Shareholders may fill … a form and mail it in authorizing management to vote … their behalf.

4.The board usually consists … 15 to 25 directors.

5.It is quite usual for one person to serve at the same time … several different corporate boards.

6.The board considers policy related … operational decisions.

7.The real power in a corporation rests … its chief executive officer.

8.The CEO is responsible … setting down the policies of the company … the direction of the board.

9.The ESOP encourages workers to buy shares of stock in the companies they work … .

9. Translate into English:

Собственниками корпорации часто являются не те люди, которые ею руководят. Собственниками корпорации являются акционеры. Люди покупают акции, так как надеются, что фирма будет расти и получать прибыль. Держатели акций имеют право посещать собрания акционеров и принимать решения по основным вопросам, таким, например, как замена членов совета директоров, а иногда и президента.

Совет директоров собирается несколько раз в год для того, чтобы убедиться в том, что дела компании идут хорошо. Повседневные решения принимают менеджеры внутри корпорации, хотя совет директоров вправе нанимать и увольнять (to fire) руководителей высшего звена. Директоров избирают акционеры.

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Главный исполнительный директор управляет фирмой и несет ответственность за её работу перед советом директоров и акционерами.

10.Prepare a short talk on any of these subjects:

2.Officers

С

1. Read the text “Large Corporations” without a dictionary and answer the question:

“What advantages do large corporations have over small – and medium – size ones?”

The following words will help you understand the text:

Large Corporations

Although there are many small – and medium – size corporations, bigger business units are needed to perform certain services in the vast American economy. Large corporations can supply goods and services to a greater number of people across a wider geographic area than small businesses. They serve consumers across the nation and across the world. Corporate products tend to cost less because of the large volume and small overhead costs per unit sold. Moreover, consumers benefit from the availability of corporate “brand names” which they recognize as guaranteeing a certain level of quality wherever purchased.

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Large corporations also have the financial strength to research, develop and produce new goods. Their scientific know – how, innovation and technical capability are critical to maintaining the nation’s competitiveness and productivity.

Some 500 major corporations occupy an important role in American business, although in some respect it has been a declining one. From 1978 to 1990, the profits of these 500 firms taken together have risen from $ 61.5 thousand – million to $ 93.3 thousand – million and assets have risen from $ 898.5 thousand – million to $ 2,298.6 thousand – million. In 1990 some 12.4 million people were employed by these firms, 1 million fewer than in 1986.

2. Give a summary of the text in Russian.

D

1.Words and expressions to be memorized:

2. Read the text:

Advantages and Disadvantages of Corporations

The corporate form of business is a more flexible instrument for large-scale economic activity than the sole proprietorship or partnership.

First, because the corporation itself has legal standing, it safeguards its owners, relieving them of individual legal responsibility when they act as agents of the business.

Second, the owners of shares of stock have limited liability: they are liable only to the limit of their investment, they are not responsible for corporate debts. If a shareholder paid $100 for 10

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shares of stock and the corporation goes bankrupt, he or she can only lose the $100 invested.

Third, corporate stock is liquid, that is investment in a publicly held corporation can easily be converted to cash.

Fourth, corporations have unlimited life span. The corporation is not damaged by the death or disinterest of a particular person. An owner of stock can sell his or her holdings at any time or pass the stock along to heirs.

Yet the corporate business organization has drawbacks as well as benefits.

One disadvantage relates to taxation. As a separate legal entity, the corporation must pay taxes. The federal corporate tax rate taxes corporations at a higher rate than unincorporated businesses. Unlike the treatment of interest on bonds, dividends paid to shareholders are not a tax deductible business expense for the corporation. When the corporation passes along profits to individuals in the form of dividends, the individuals are taxed again on these dividends. This is known as “double taxation”.

Another drawback results from the fact that ownership becomes separated from management. While this makes management easier, some managers are tempted to act more in their own interests than those of the stockholders.

Other disadvantages include the public disclosure requirements, whereby corporations must make some types of financial information public and the cost of incorporation and the cost of making a public stock offering (for a public corporation).

3. Say if the following statements are true of false. If false, say why:

1. Compared to other forms of business organizations, corporation is a more flexible instrument for large-scale economic activity.

2.A corporation is an artificial person with a limited life span.

3.Limited liability is not a characteristic of corporations.

4.Corporations are taxed more heavily than unincorporated businesses.

5.An owner of stock can neither sell his or her holdings nor pass the stock along to heirs.

6.Corporate stock in a privately held corporation is liquid.