CORPORATIONS

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A business corporation is an institution established for the purpose of making profit. It is operated by individuals. Their shares of ownership are represented by stock certificates. A person who owns a stock certificate is called a stock-holder.

There are several advantages of the corporate form of ownership. The first is the ability to attract financial resources. The next advantage is the corporation attracts a large amount of capital it can invest it in plants, equipment and research. And the third advantage is that a corporation can often higher salaries and thus attract talented managers and specialists.

The privately owned business corporation is one type of corporation. There are some other types too. Educational, religious, charitable institutions can also incorporate. Usually such corporation does not issue stock and is nonprofit. If there is a profit, it is reinvested in the institution rather than distributed to private stockholders.

In some western countries, cities, states, federal government and special agencies can establish governmental corporations. A few examples of these governmental corporations are state universities, state hospitals and city owned utilities. Governmental corporations are non-profit as a rule and usually they do not issue stock certificates.

Active Vocabulary

corporation корпорація

to establish започатковувати

stock certificate акція

stockholder (shareholder) акціонер, власник акцій

to attract financial resources залучувати фінансові ресурси

to offer high salaries пропонувати високу зарплатню

to attract a large amount of capital залучувати великий капітал

educational, religious, освітні, релігійні,

charitable institutions благодійні заклади

to issue stock випускати акції

nonprofit неприбутковий

to reinvest вкладати ще раз

Comprehension Questions

1. Who can own a corporation?

2. Is a corporation necessarily larger than a sole proprietorship?

3. What are the advantages of the corporate form of ownership?

4. What can you say about the disadvantages of the corporate form of ownership?

5. Do the corporations issue stock to stockholder?

6. What kind of corporations usually don't issue the stock?

7. What world-known corporations do you know?

8. What types of business usually take the corporate form of ownership?

Vocabulary Practice

Exercise 1. Choose the necessary word and put it in the sentence.

1. What kind of... is better: buying stock or buying real estate? 1 charitable

2. To attract greater financial... the company issues the stock. 2 stock

3. A university can be... corporation. 3 resources

4. The partners didn't put the same... into business. 4 institution

5. The group of people from different countries are

going to... a corporation. 5 investment

6. The Red Cross is an international... organization. 6 nonprofit

7.I want to buy some ... in IBM and General Motors. 7 amount of capital

8. An educational... usually reinvests all its money. 8 to establish

Dialogue

Secretary Good afternoon.

Steve Good afternoon. I'd like to see Mr. Jackson. We have an arrangement with

him. My name is Mr. Watson.

Secretary Just a minute, please. I'll let him know you are here.

Steve Thanks.

Secretary Mr. Jackson is waiting for you. Do you know where his office is?

Steve Oh sure, thank you.

Jackson Hello, Steve, it's so nice to see you. Sit down, Please.

Steve Thanks, Nick. How are you getting on?

Jackson Quite all right, thanks. And what about you?

Steve Everything is all right too. In fact I want to talk to you about my business. Jackson Oh, I'll be glad to do something for you.

Steve Well, Nick. I need some legal advice. John and I are thinking of incorporating.

Jackson You are going to expand, aren't you? It seems that your partnership has been

doing very well.

Steve Oh, yes. We have a success. Now some businessmen are interested in

investing with us. So could you explain me what sort of legal procedure I

have to follow to form a corporation?

Jackson At first you have to apply for a corporate charter.

Steve Well?

Jackson Let me get this straight. You want to issue and sell stock in exchange for

investment capital, don't you?

Steve Exactly.

Jackson After you obtain the charter the stockholders, as owners, hold a meeting to

organize the corporation.

Steve Does that mean we elect our Board of Directors, adopt bylaws and choose the

company's officers?

Jackson That's what I mean. Though the officers of the company supervise daily

management, the stockholders always have final authority. They vote at

annual meetings.

Steve Yes, I see it. By the way, does a corporation have limited liability?

Jackson It does. It also has the right to own property, to buy and sell and right to sue

and be sued.

Steve I see. The corporation acts like a person. It has the right of an individual. Jackson You are right.

Steve O.K. Why don't we get together for a game of golf one day next week?

Active Vocabulary

bylaws юридичні положення для підприємств

I need some legal advice мені потрібна юридична порада

to incorporate об’єднуватися

to invest вкладати гроші

to expand розширювати (виробництво)

to follow a legal procedure діяти згідно юридичної процедури

to apply for a corporate charter подавати заяву на корпоративний патент

to issue and sell stock випускати і продавати акції

in exchange