Corporations (limited companies) Management

АЯЮ стр. 71

Task 1. Activating the chart.

The following texts should be completed with the appropriate words from each box.

 

Shareholders Shareholders own stock (called shares, or ownership interests) in the corporation. Shareholders have the exclusive right to make the following decisions: - elect and remove directors - amend the articles of incorporation and bylaws - approve the sale of all or substantially all of the corporate assets - approve reorganizations, and - dissolve the corporation. Shareholders are paid dividends out of the company’s profits.

Shareholders

Corporation owners are its shareholders. The shareholders own ….., or ……in the corporation. This ownership provides them with the most important right – the right to vote. Shareholders voting typically takes place at an annual meeting, when certain corporate decisions are made. For example, after incorporation at the first meeting they …. the directors who manage the corporation, and …...the bylaws of a corporation. Later, in the process of corporation development, the shareholders can ……. a director by voting at an annual meeting. The shareholders can also ……. the bylaws if some changes are necessary. No decision to sell corporate assets is possible to be made without shareholders. They must ….. such decisions as well as decisions to reorganize or ……… a corporation.

Shareholders are paid dividends out of the company’s profits

 

Directors The board of directors sets policy for the corporation and makes major financial decisions. Function of the Board is to do following: - set corporate philosophy and policy - select and appoint officers and managers to run company. - make major company decisions - pay dividends Among other things, the directors: - authorize the issuance of stock - elect the corporate officers - set officer and key employee salary amounts - decide whether to mortgage, sell, or lease real estate, and - approve loans to or from the corporation

Directors

Corporations are governed by directors who are elected by the ………... The directors form the Board whose primary role is to set the ……. ……… and ………. major business and financial decisions. The corporate policy is a plan of action to guide company operation, management and administration. The directors ………. and ……… officers and managers who …… the company, are responsible for day-to-day operation and report to the directors. To compensate them for their services the directors … …… …… for officers and key employees.

Directors must hold meetings at regular intervals as defined in the corporate bylaws and, in addition, may also call special board meetings when necessary. At board meetings, directors discuss problems affecting the corporation and make ………. to solve the problems.

For example, a company expands and needs big amounts of money for the development. The company has two options: it can either borrow money from a bank or it can issue more shares. Then the Board of Directors should either ……. … ……. to a corporation or …………. … …… … ……….. If a company is going to purchase some land, or sell a factory building, or lease a new office, the directors have to decide whether to buy, sell or lease … ……... Directors also decide if a corporation can ……… some real estate to get a big loan.

When a corporation makes a substantial profit the directors have to make a decision whether to … higher ………. to the shareholders, or to retain the profit for some beneficial projects.

The most important duty owed by a director to a corporation is the duty of care. This duty of care requires directors to diligently …… their obligations.

Duty of care - обязанность блюсти интересы компании

Diligently - старательно

 

Officers are responsible for the routine operation and management of the corporation. Function of officers and managers: - execute corporate philosophy; - be in charge and organize the operations of departments, divisions or groups; - work out strategies; - select employees; The particulars of an officer or manager’s activity depend on the area of responsibility: finance, production, marketing, sales, human resources, research and development. Managing Director appointed by the Board of Directors is responsible for the day-to-day operations of the whole company.

 

Officers

Officers are responsible for the routine operation and management of the corporation. They ……… corporate philosophy.

The roles of top corporate officers - typically the managing director or the corporation's president, vice presidents and chief financial officer - are defined by the corporate bylaws, articles of incorporation, and statutes. The president acts as the primary officer and sometimes is called the chief executive officer or CEO. The vice president is the second in command and makes decisions in the president's absence. The chief financial officer (CFO) is responsible for corporate finance.

The particulars of an officer or manager’s activity depend on … ……... …………: finance, production, marketing, sales, human resources, research and development. Each manager (or director) is … ……. … a certain department where he or she organizes the ………... Managers ……… employees for their department, and their responsibility is to …… …. efficient ………. and set clear ……….. They should ………. their employees, ………… and ……… the operations.

 

Task 2. Practice answering the following questions using the words and phrases from Tasks 1 and 2.

 

1. What does the ownership provide for the shareholders?
2. Where does shareholders’ voting take place?
3. When do the shareholders realize their exclusive right to vote?
4. Can the shareholders make changes in the corporate bylaws?
5. Must the shareholders take part in reorganization of the corporation?
6. What is the primary role of the board of directors?
7. How are annual meetings arranged?
8. Are officers and managers compensated for their work? How?
9. What decision can the board make when the corporation needs a big amount of money?
10. How are real property problems solved?
11. What does duty of care mean?
12. Who are the top corporate officers?
13. What are corporation officers responsible for?
14. What is the manager’s role?

 

Task 3. Make sure you know how to translate the following words and phrases:

право голосовать, ежегодное собрание акционеров, одобрить решение; управлять корпорацией; установить размер заработной платы; обязанность блюсти интересы компании; созвать собрание; проводить собрание; выработать стратегию; уполномочить выпуск акций; недвижимость; выполнить обязательство; арендовать офис; получать ссуду под недвижимость; определить политику корпорации; отстранить от должности директора;

зона ответственности; подбирать работников; поставить цель; должностное лицо с исполнительными функциями, вносить поправки в документ, распустить корпорацию

Task 4. For each part of the text (A, B and C) choose the title that most explicitly reflects the content.

1. The importance of limited liability
2. The necessity to show that the corporation is not a legal entity
3. The reason why it’s necessary to observe the formalities
4. Observation of corporate formalities
5. The director’s responsibilities
6. The formalities that a corporation must observe
7. About those who oversee the routine operations
8. The responsibilities of corporation members

A

A corporation is owned by its shareholders. The shareholders don't have any control over the day-to-day operations of the business directly. The shareholders are responsible for electing directors of the corporation. The directors oversee the operation of the corporation and make major corporate decisions, such as appointing the officers of the corporation. The directors meet at least annually to assess the past performance of the corporation and to plan for the future. The officers of the corporation are responsible for the day-to-day operations of the company.

 

B

Once the directors are elected and the corporate officers are appointed, the corporation can begin to operate. However, it is important that the corporation observe all the formalities of being a corporation. The formalities include, among other things, issuing stock certificates to the shareholders, holding annual meetings, recording the minutes of the meetings in the corporate register, and electing directors or ratifying the status of existing directors.

 

C

Observing all the corporate formalities provides evidence that the corporation is a separate legal entity rather than an extension of the shareholders. The reason it is necessary to enforce the notion that the corporation is a separate legal entity that is to protect the limited liability of the shareholders. If the corporate formalities are not observed, someone suing the corporation may be able to show that the corporation is not a separate entity from its shareholders. The shareholders will then be liable for the corporation's debts.

 

Task 5. Match the words or phrases which are used in the text with the following appropriate definitions.

 

1. meetings held each year	observe formalities
2. present proof	sue a corporation
3. keep up the established rules	provide evidence
4. supervise the activity	ratify the status
5. written record of a meeting	annual meeting
6. estimate the results of corporation activity	assess the performance
7. current activity	separate legal entity
8. accept that the existing directors keep their positions	minutes of the meeting
9. bring out a certificate of ownership to corporation owners	oversee the operations
10. organization distinct from the owners	issue stock certificate
11. bring a lawsuit against a corporation	day-to day operation

 

Task 6. Answer the questions

What are the responsibilities of shareholders?

What are the responsibilities of directors?

What are the formalities a corporation has to observe?

Why is it important to observe these formalities?

Why is it important for a corporation to be considered as a separate legal entity?

What can happen if the corporate formalities are not observed?

 

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