TO AS LTD., INC., GMBH, OR S.A.?

An individual, like Henry Ford, might want to begin a small enterprise and personally retain total responsibility and liability, but once it starts to grow, a partnership or a "company" - such as Ford Motor Company - would need to be formed. The key factor in owning any company is the guarantee called limited liability: the owners of a company never have to pay more than they have invested in the company. Their liabilities are limited. When a company goes bankrupt, the owners can never be required to pay its unpaid bills.

The worst that can happen to investors in a limited liability company is losing their initial investment if the company fails. By limiting the risk for shareholders, companies are able to attract equity investors and raise large amounts of funds called equity capital through sales of shares rather than by borrowing money at potentially high interest rates.

The names of companies around the world reflect this guarantee of limited liability. The abbreviations "GmbH" in Germany, "Inc." in the United States or "Ltd." in most other English-speaking countries indicate that the firm is a limited liability company and investors have nothing more to lose than the money invested in their shares. The "S.A." in French-and Spanish-speaking countries also refers to limited liability by defining shareholders as "anonymous". Since the identity of shareholders can be kept secret, the creditors of a bankrupt company have no right to pursue them for the company's unpaid debts.

Many countries make a clear distinction between public and private companies, with separate designations, such as AG and GmbH in Germany, or Plc and Ltd. in Britain. Generally, "public" companies are those large enough to have their shares traded on stock exchanges, while smaller unquoted companies are said to be "private", even though their shares can be held by the public at large. In some countries, a large company is said to be privately owned if its shares are not available to the general public. In the United States, where little distinction is made between public and private companies, most companies simply bear the title "Incorporated".

2.2. Find in the text English equivalents of these words and phrases.

1. утримувати, зберігати

2. відповідальність, обов’язок

3. грошові зобов’язання

4. ключовий фактор

5. обмежена відповідальність

6. збанкрутувати

7. несплачені рахунки

8. початкове капіталовкладення

9. власник акцій

10. залучати фінансові ресурси

11. власний капітал

12. процентна ставка

13. відображати

14. скорочення

15. вказувати

16. тотожність, ідентичність

17. переслідувати

18. різниця. відмінність

19. позначення, назва

20. фондова біржа

21. компанія, акції якої не зареєстровані на фондовій біржі

22. бути доступним

23. громадськість

24. мати заголовок

25. зареєстрований як корпорація

2.3. Are these statements true or false? Correct the false ones.

a) Limited liability means that the owners of a business are responsible for losses only up to the amount they invest.

b) Investors can never lose their primary investment if an entity goes out of business.

c) In French -and Spanish- speaking countries the lenders of capital are obliged under the law to pursue a bankrupt company for the unpaid debts.

d) Public companies may offer shares to the public at the stock exchange.

e) In some countries private limited liability companies’ shares may not be offered to the public.

2.4. Use the key words and retell the text according to the plan:

1. The key factor in owing any company (the guarantee; the owners of a company; liabilities are limited; can never be required to pay).

2. Thе best way of attraction equity investors to the companies (by limiting the risk of shareholders; through sales of shares rather than by borrowing money).

3. What do the names of companies around the world reflect (the guarantee of limited liability; to have nothing more to lose; the money invested in the shares; can be kept secret; to have no right to pursue for; unpaid debts; to make a clear distinction; to have shares traded; can be held by the public at large; to be privately owned).

3.1. Read text 3 and be ready to speak about the importance of a sound and flexible strategy for a firm in achieving set objectives.

TEXT 3

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