Company law 2

A. Private and public companies

Private companies usually have ‘Limited’ or ‘Ltd’ at the end of their name. They are not allowed to sell their stocks or shares on an open market. Most companies are private; there are about one million private companies in Britain, compared to around 2,000 public limited companies (PLCs). These companies have ‘pic’ at the end of their name, and their shares are publicly traded on the London Stock Exchange. A stock exchange is a market where anyone can buy stocks and shares. The US equivalent of a PLC is a company or corporation registered with the Securities and Exchange Commission (SEC).

SEC-registered companies, also known as listed companies, have to make quarterly reports (i.e. every three months). They report on:

■ sales revenue or turnover - the money received by the company in that period from selling goods or services

■ gross profit - turnover less cost of sales

■ net profit - gross profit less administrative expenses and tax.

Companies on the London Stock Exchange, known as quoted companies, have to produce a half-yearly interim report which informs shareholders about the company’s progress. These reports are not audited.

All companies with shareholders or stockholders have to send them an Annual Report each financial year. This contains a review of the year’s activity, and an examination and explanation of the company’s financial position and results. There are also financial statements and notes, and the auditors’ report on the financial statements.

BARCLAYS PLC Interim Report 2004

§ Group performance was very strong: o profit before tax up 23% to £2,411 m o earnings per share up 25% at 26.7p o dividend per share up 17% to 8.25p o return on equity of 20.4% § All businesses had higher profits, demonstrating good progress across the whole portfolio. § Income growth was particularly strong, up 14%, with good broad based contributions by business and by income type.

B. AGMs

Public companies have to hold an Annual General Meeting (AGM), and most private ones do too. At this meeting the shareholders can question directors about the content of the Annual Report and the financial statements, vote to accept or reject the dividend recommended by the directors, and vote on replacements for retiring members of the board. The meeting can also carry out any other business stated in the company’s Memorandum of Association or Certificate of Incorporation, and Articles of Association or Bylaws.

If there is a crisis, the directors or the shareholders can request to hold an Extraordinary General Meeting (EGM) to discuss the situation. For example, if there are claims of misconduct by the directors, where they have behaved illegally, there could be an EGM.

BrE: Annual General Meeting (AGM); AmE: Annual Meeting of Stockholders BrE: Extraordinary General Meeting (EGM); AmE: Special Meeting

Ex.4.1.Complete the table. Look at texts AandBto help you.

(1) …… companies	Public companies
■can't sell shares on the (2)……..	in the UK	in the US
■ are called public3) ………. Companies or 4) ……… companies	■ are called SEC- registered companies or 6) …… companies..
■ produce (5) …….. reports.	■ produce (7)………. reports.
■ publish an (8) ………. and hold an ………. (9)

Ex.4.2. Find words in texts A and В with the following meanings.

1 behaviour that breaks the law

2 sales revenue minus the cost of sales, before deductions for administration expenses, interest charges, etc.

3 sales revenue minus the cost of making and selling the goods, and deductions for administration expenses, interest charges, etc.

4 the total amount of money a company receives from selling goods or services

Ex.4.3.Match the two parts of the sentences. Look at texts A and В to help you.

1 Only quoted or listed companies

2 American corporations publish details

3 Companies’ financial statements, and the auditor’s report,

4 Quarterly and six-monthly reports

5 Shareholders can ask company directors questions

6 Companies can hold an emergency general meeting

a)about their sales and profits every three months,

b)are contained in their annual reports,

с)are not checked by external auditors,

d) if there is a crisis.

e)can have their shares traded on a stock exchange,

f)at an annual meeting.

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