- •Unit I company law lead-in
- •Answer the questions.
- •Comment on the following:
- •I. Read the text.
- •Main features of a company
- •Advantages of company
- •Disadvantages of a company
- •I. Classification on the Basis of Incorporation
- •Classification on the Basis of Liability
- •Principle of corporate/company veil
- •Classification of companies2
- •III. Classification on the Basis of Number of Members
- •Classification on the Basis of Ownership
- •Classification on the Basis of Independence
- •Companies in action: special attributes and key parties3
- •Corporate personality and lifting the veil4
- •Lifting the corporate veil
- •Winding up of a company5
- •Dissolution of a company
- •II. Answer the questions.
- •III. Define if the following sentences are true or false. Use the required information from the text above and correct the false statements.
- •Language focus
- •I. Fill in the gaps using the above words and expressions.
- •II. Study the use of the phrases with “company” and translate the sentences given below into Ukrainian.
- •III. Match the following abbreviations and acronyms with their full equivalents.
- •Grammar focus
- •I. Translate the following sentences into English.
- •II. Read the text and fill in the gaps with the given verbs in appropriate form.
- •International company registration services by efsag
- •Writing
- •Self-control
- •I. Word formation. Complete the following tables:
- •II. Read the article taken from “Oxford Business And Management” and translate it into Ukrainian.
Advantages of company
Perpetual Succession. As a company is created by law it can be dissolved only by law, if required. It is not affected by the existence of its members. It is not affected by the death, lunacy or insolvency of its members. It goes on even if all the members die. “Members may come, members may go but the company goes on for ever.”
Adequate Finance. A company collect its finance by the issue of shares to a large number of persons. It can collect any amount it requires. Bank and other financial institutions also grant the easy loans and advances to company.
Limited Liability of Members. As member’s liability is limited, company is a very attractive form of Organisation. Members can be held responsible only up to the value of shares they have purchased.
Transferability of Shares. Investors like to invest in the company because its shares are easily transferable. They can withdraw their investment whenever they like by selling their shares.
Democratic Set-up. Company is managed in a democratic manner by the representatives elected by its members. Directors have to manage and administer the company according to the rules framed by the shareholders.
Efficient Management. The company is managed by the representatives of its owners, who, of course, can be the experts in their fields.
Scope for Expansion. A company can easily be expanded whenever required as it can collect required money easily, its expansion never suffers due to lack of funds.
Necessary for Giant Projects. Projects and plans requiring huge amount of capital and skill can be implemented through a company form of organisation because all other forms of organisation suffer from the drawback of limited capital and skill.
Incentives for Small Savings. A company encourages the small savings of the country because the nominal value of its share is very small, say Rs. 10 or Rs. 100. These can be purchased by most of persons. Thus, every citizen of the country may contribute towards the economic growth of the country.
Helpful in the Industrial Development. Company organisation helps in promoting the industrial development of the country by making the establishment of big companies possible.
Disadvantages of a company
Legal Formalities. At the time of incorporation of company has to undergo numerous difficult legal formalities. This is also true for the routine management, administration and winding up. So, it is difficult to establish, manage and dissolve a company.
Ownership and Management are Divorced. A great drawback of the company is the divorce between ownership and management. It is not managed by those who own it and it is not owned by those who manage it.
Slack in Management Separation of ownership and management creates problems in the management of a company. Due to possible differences between director and shareholders on various points often the decisions are imposed by majority on minority.
Exploitation of Shareholders Interests. As a company is managed by a Board of Directors they may exploit the company resources in their interest and not in the interest of shareholders.
Fraud by Promoters. Sometimes the promoters of a company cheat the shareholders by making fraudulent sales and purchases in their own interests.
Delay in Decisions. In taking any decision a company has to undergo a pre-decided procedure. This causes unnecessary delay in the decision making process and the company sometimes misses the golden opportunity.
Speculation in Securities. As Companies shares and debentures are dealt by the brokers working in stock exchanges, it may lead to speculation in the value of securities.
Lack of Secrecy. A company has to publish its accounts, director’s report and auditors report which deprives it of the secrecy.
Lack of Direct Motivation. As its ownership and management are separate, company form of organisation suffers from the lack of direct motivation.
Disadvantages of Large Scale. As a company is generally established for carrying on big business plans and projects, it carries with it all the disadvantages of large scale trade or production.