Advantages and disadvantages of corporations.

ТЕМА: JOINT VENTURES

Active Vocabulary

A joint venture – спільне підприємство

To set up – організувати, встановити

To have limited liability – мати обмежену юридичну відповідальність

To be self – supporting and self – financing – бути самопідтримуючим та

самофінансуючим

Direct access – прямий доступ

To offer – пропонувати

to repatriate – переказати

share of profit – доля капіталу

to satisfy the requirements – задовольняти вимоги

domestic market – внутрішній ринок

to attract – притягувати

to reduce irrational import – скоротити нераціональний імпорт

by means – шляхом, засобом, з допомогою

substitution – заміна, заміщення

a juridical person – юридична особа

foundation documents – документи про утворення

The application procedure – процедура оформлення

Practice Vocabulary

Ex.1 Read and translate the text

Ukrainian enterprises have a right to set up joint ventures on the Ukrainian territory with foreign firms. A joint venture can be created between any number of foreign and Ukrainian enterprises.

A joint venture has limited liability. It should be self-supporting and self-financing.

Joint ventures offer foreign investors direct access to the Ukrainian market. It way be set up in any branch of Ukrainian economy: agriculture, industry, trade, construction, service sector, etc. A foreign participant may repatriate his share of profit abroad.

The main features of interest to the Ukrainian participant are:

– to satisfy the requirements for the domestic market;

– to attract foreign technology and foreign management experience;

– to improve the export base of Ukraine and reduce irrational imports by means of import substitution.

If the parties want to form partnership a Protocol of intent is normally signed.

A joint venture becomes a juridical person after it has been registered with the Ministry of Finance. The foundation documents and the Feasibility Study are the most important documents for the application procedure.

Foundation documents

The foundation documents include the Agreement between the partners on the establishment of a joint venture and the Charter or Statue of a joint venture. These documents outline the legal status of a venture, the funds raised, Management and Personnel some other provisions.

Answer the questions:

1. Who can create a joint venture?

2. What do joint ventures offer?

3. Where may a joint venture be set up?

4. Do foreign partners repatriate their capital abroad?

5. What are the main features of interest to the Ukrainian market?

6. What document is usually signed when the parties want to form a partnership?

7. When does a joint venture become a juridical person?

8. What are the most important documents for the application procedure?

Text for additional reading

Advantages and disadvantages of corporations.

The conception of incorporation is not too difficult, even though the procedures for incorporating are often rather complex. Most people are not willing to risk everything to go into business. Yet, for businesses to grow and prosper and create abundance, many people would have to be willing to invest their money in business. The way to solve this problem was to create an artificial being, an entity that existed only in the eyes of the law. That artificial being is called a corporation. It is nothing more than a technique for involving people in business at a minimal risk. Let’s explore the advantages of such an entity:

1. More money for investment. To raise money, a corporation sells ownership (stocks) to anyone who is interested. This means that millions of people can own part of major companies. If a company sold 10,000,000 shares for $ 50 each, it would have & 500 million available to build plants, buy materials, hire people, build products, and so on. Such a large amount of money would be difficult to raise any other way. So a major advantage of corporation is their ability to raise large amounts of money.

2. Limited liability. Corporations in England and Canada have the letters “Ltd.” After their names, as in British Motors, Ltd. The Ltd. stands for limited liability and is probably the most significant avantage of corporations. Limited liability means that the owners of a business are responsible for losses only up to the amount they invest.

3. Size. That one word summarizes many of the advantages of corporations. Because they have large amounts of money to work with, corporations can build large, modern factories with the latest equipment. They can also hire experts or specialists in all areas of operation. Furthermore, they can buy other corporations in other fields to diversify their risk. (What this means is that a corporation can be involved in many businesses at once so that if one fails the effect on the total corporation is lessened.) in short, a major advantage of corporations is that they have size and resources to take advantage of opportunities anywhere in the world. Corporations don’t have to be large to enjoy the benefits of limited liability and more money for investment.

4. Tax advantages. Once a person, partnership, or group of individuals have incorporated, they often receive significant tax advantages. They can deduct expenses for automobiles, meals, trips, and much more from their taxes. They can reinvest profits into the corporation to postpone paying taxes, and more. One of the most important tax advantages is tax-free fringe benefits, such as retirement funds.

5. Perpetual life. Because corporations are separate from those who own them, the death of one or more owners does not terminate the corporation.

6. ease of ownership change. It is easy to change the owners of a corporation. All that is necessary is to sell stock to someone else. This means that new owners can be brought in easily as well.

7. Separation of ownership from management. Corporations are able to raise money from many different investors without getting them involved in management. The corporate hierarchy looks like the pyramid. The owners/shareholders are separate from the managers and employers. The owners elect a board of directors. The directors select the officers. They, in turn, hire managers and employees. The owners thus have some say in who runs the corporation, but no control.

1. Answer the questions.

1. What are the various ways businesses are formed?

2. Which form of business is the most popular?

3. What does unlimited liability mean?

4. What does limited liability mean?

5. Why do people incorporate?

6. How do you form a corporation?

2. Get ready to speak on one of the following topics.

1. Now that you have read about sole proprietorships, partnerships, and corporations, which sound like the best place for you to work? Why? Which calls for taking the most risks? Which would be the most fun or the most profitable? What part of your personality determines where you fit in best of all?

2. What is the role of owners in the corporate hierarchy?

3. There is an old saying “He doesn’t have twelve years of experience; he has had one year’s experience twelve times”. What does this saying tell you about the managerial expertise of people selling their businesses?

4. Get ready to speak on the topic using given situation.

In groups of 4 or 5 decide which of the statements (a, b, c) given below best describe your collective viewpoint. After you reach a consensus, develop arguments in support of your group’s position. Be prepared to defend your opinions to the entire class:

a) it is better to be busy in sole proprietorship business

b) it is better to be busy in 2 kinds of business: sole proprietorship and corporation

c) it is necessary to develop 3 kinds of business: sole proprietorship, partnership and corporation.

5. Get ready to discuss advantages and disadvantages of corporations.

Дата добавления: 2015-10-30