2.

THE FORMS OF BUSINESS OWNERSHIP

That business does not prosper which you
transact with the eyes of others
Sir Roger LEstrange
Learning objectives
!. "e#ine t$e t$ree %ost co%%on #or%s o# b&siness o'ners$i(
so)e (ro(rietors$i(* (artners$i(* an+ cor(oration
2. Be a'are o# t$e a+vantages an+ +isa+vantages o# so)e
(ro(rietors$i(s
,. -ras( t$e unlimited liability conce(t
.. /na)01e $o' t$e so)e (ro(rietors$i(s #&nction bot$ in t$e US/
an+ in t$e Re(&b)ic o# Mo)+ova
St&+0 an+ Learn t$e Wor+s
English English equivalents Romanian Russian
soe propretorshp
ntreprndere
ndvdua

partnershp (n)
partenerat,
asocere
c,
uc
corporaton (n)
socetate pe
ac[un
ku
uc
nstance (n) partcuar exampe, case
to account for
(ph.v)
a consttu, a
reprezenta, a se
cfra a
cc
corner grocery
a sma shop that ses food and
other thngs, esp. the one
stuated near peopes houses
caterng servces
the work of provdng food and
drnks for meetngs or soca
events
appance store
magazn de
eectrocasnce
Hrs Ln
xk
to seek sth to ask sb for sth
ncome tax mpozt pe vent
xLn
r
to get ones hands
on sth
to fnd or get sth
unmted abty
rspundere
nemtat
r
cc
assets (n) actve, avere
kL,
Huc
to seze to take sth usng force
contnuty (n)
contnutate,
succesune
Hcc
mortgage oan
a credt for whch ony rea
estate s pedged
credt potecar
Ln
k
to be ncapactated
to be unabe to ve or work
normay
on occason sometmes
|antor (n) caretaker
expertse (n)
cunotn[e,
ndemnare
s ,
kHu
to qut to eave ones |ob
The three most commmon forms of busness ownershp n the Unted States
are the so)e (ro(rietors$i(* (artners$i(* an+ cor(oration. In terms of
ownershp, corporatons are generay the most compex, and soe propretorshps
are the smpest. In terms of organzaton, however, a three usuay start sma
and smpe. Some, ke IBM, grow and grow.
2.!. So)e Pro(rietors$i(s
/ so)e (ro(rietors$i( s a busness that s owned (and usuay operated) by
one person. Soe propretorshp s the odest and smpest form of busness
ownershp, and t s the easest to start. In most nstances, the owner (the sole
propretor) smpy decdes that he or she s n busness and begns operatons.
Some of the argest of today's corporatons, ncudng Ford Motor Company, H.|.
Henz Company, and |.C. Penney Company, started out as tny soe propretorshps.
There are more than tweve mon soe propretorshps n the Unted States.
They account for more than two-thrds of the countrys busness frms. Soe
propretorshps are most common n the retang, agrcuture, and servce
ndustres. Thus the specaty cothng shop, corner grocery, and teevson repar
shop down the street are key to be soe propretorshps.
Most of the advantages and dsadvantages of soe propretorshps arse from
the two man characterstcs of ths form of ownershp: smpcty and ndvdua
contro.
/+vantages o# So)e Pro(rietors$i(s
Ease and Low Cost of Formation and Dissolution No contracts,
agreements, or other ega documents are requred to start a soe propretorshp.
Most are estabshed wthout even an attorney. A state or cty cense may be
requred for certan types of busnesses, such as restaurants or caterng servces,
that are reguated n the nterest of pubc safety. But beyond that, a soe
propretor does not pay any speca start-up fees or taxes. Nor are there any
mnmum capta requrements.
If the enterprse does not succeed, or the owner decdes to enter another ne
of busness, the frm can be cosed as easy as t was opened. Credtors must be
pad, of course. But the owner does not have to go through any ega procedure
before hangng up an "Out of Busness" sgn.
Retention of All Profits A profts earned by a soe propretorshp become
the persona earnngs of ts owner. Ths provdes the owner wth a strong ncentve
to succeed-perhaps the strongest ncentve-and a great dea of satsfacton when
the busness does succeed. It s ths drect fnanca reward that attracts many
entrepreneurs to the soe propretorshp form of busness.
Flexibility The soe owner of a busness s competey free to make decsons
about the frm's operatons. Wthout askng or watng for anyone's approva, a soe
propretor can swtch from retang to whoesang, move a shop's ocaton, or open
a new store and cose an od one. A soe owner can aso respond to changes n
market condtons much more qucky than the operators of other forms of
busness. Suppose the soe owner of an appance store fnds that many customers
now prefer to shop on Sunday afternoons. He or she can make an mmedate
change n busness hours to take advantage of that nformaton (provded that
state aws aow such stores to open on Sunday). The manager of one store n a
arge corporate chan may have to seek the approva of numerous managers
before makng such a change. Furthermore, a soe propretor can qucky swtch
suppers to take advantage of a ower prce, whereas such a swtch coud take
weeks n a more compex busness.
Possible Tax Advantages The soe propretorshp's profts are taxed as
persona ncome of the owner. Thus a soe propretorshp does not pay the speca
state and federa ncome taxes that corporatons pay. (As you w see ater, the
resut of these speca taxes s that a corporaton's profts are taxed twce. A soe
propretorshp's profts are taxed ony once.) Aso, recent changes n federa tax
aws have resuted n hgher tax rates for corporatons than for ndvduas at
certan ncome eves.
e!re!y Soe propretors are not requred by federa or state governments to
pubcy revea ther busness pans, profts, or other vta facts. Therefore, compettors
cannot get ther hands on ths nformaton. Of course, soe propretorshps must report
certan fnanca nformaton on ther persona tax forms, but that nformaton s kept
secret by taxng authortes.
Disadvantages of ole Pro"rietorshi"s
#nlimited Liability Un)i%ite+ )iabi)it0 s a ega concept that hods a soe
propretor personay responsbe for a the debts of hs or her busness. Ths
means there s no ega dfference between the debts of the busness and the debts
of the propretor. If the busness fas, the owner's persona property-ncudng
house, savngs, and other assets-can be sezed (and sod f necessary) to pay
credtors.
Unmted abty s thus the other sde of the owner-keeps-the-profts con. It
s perhaps the ma|or factor that tends to dscourage woud-be entrepreneurs from
usng ths form of busness organzaton.
La!$ of Continuity Legay, the soe propretor s the busness. If the owner
des or s decared egay ncompetent, the busness essentay ceases to exst. In
many cases, however, the owner's hers take over the busness and contnue to
operate t, especay f t s a proftabe enterprse.
Limited Ability to %orrow Banks and other enders are usuay unwng to
end arge sums to soe propretorshps. Ony one person-the soe propretor-can
be hed responsbe for repayng such oans, and the assets of most soe
propretors are fary mted. Moreover, these assets may aready have been used
as the bass for persona borrowng (a mortgage oan or car oan) or for short-term
credt from suppers. Lenders aso worry about the ack of contnuty of soe
propretorshps: Who w repay a oan f the soe propretor s ncapactated?
The mted abty to borrow can keep a soe propretorshp from growng. It s
the man reason why many busness owners change from the soe propretorshp to
some other ownershp form when they need reatvey arge amounts of capta.
Limited %usiness $ills and &nowledge Managers perform a varety of
functons (ncudng pannng, organzng, and controng) n such areas as fnance,
marketng, human resources management, and operatons. Often the soe
propretor s aso the soe manager-n addton to beng a saesperson, buyer,
accountant, and, on occason, |antor.
Even the most experenced busness owner s unkey to have expertse n a
these areas. Consequenty, the busness can suffer n the areas n whch the owner
s ess knowedgeabe, uness he or she obtans the necessary expertse by hrng
assstants or consutants.
La!$ of '""ortunity for Em"loyees The soe propretor may fnd t hard to
attract and keep competent hep. Potenta empoyees may fee that there s no
room for advancement n a frm whose owner assumes a managera
responsbtes. And when those who are hred are ready to take on added
responsbty, they may fnd that the ony way to do so s to qut the soe
propretorshp and ether work for a arger frm or start up ther own busness.
I. 2O3/BUL/R4 PR/3TI3E
/5 Fin+ in t$e te6t t$e 'or+s t$at are s0non0%s o#
1. very sma 6. to ure
2. awyer 7. to change from sth to sth
3. propretor 8. to stop
4. promoton 9. very mportant, essenta
5. stmuus 10. responsbty
B5 Matc$ t$e 'or+s on t$e )e#t 'it$ t$eir +e#initions on t$e rig$t
1. contract a) the abty to change very qucky n order to sut new condtons
2. cense b) money that s ent to sb by a bank or another fnanca organzaton
3. tax on sth c) a person who heps or supports sb n ther work
4. start-up fee d) money that you have saved, especay n a bank
5. fexbty e) an offca wrtten agreement between two partes
6. busness hours f) money that you pay n order to set up a new busness
7. dssouton g) the proft that a company makes
8. her h) an offca document that shows that permsson has been gven to
do, own or use sth
9. assstant ) the act of offcay endng a busness
10. savngs |) the hours n a day that a shop or company s open
11. oan k) money that you have to pay to the government
12. earnngs ) a person who has the ega rght to receve sbs property and
contnue the work after ther death
35 Fin+ in t$e te6t t$e Eng)is$ e7&iva)ents #or t$e #o))o'ing ($rases
o# 'or+s
1. ateeru pentru repara[a teevzoareor/Hcck H
s
2. a ua decz/H u
3. a cere aprobarea manageruu/cu su H
4. a achta un mprumut/L sH
5. a reac[ona a schmbre n cond[e de pa[/r
sH LLx cx
6. vtor antreprenor/un H
7. un credt pe termen scurt/kkcLn k
8. magazn de eectrocasnce/Hrs Ln xk
9. a se foos de nforma[a/csc qHun
10. a- asuma rspunderea adugtoare /s c
k cc
II. 3OMPREHENSION
/5 W$at +o t$ese n&%bers in t$e te6t re#er to8
3; 1; !3; 1; ; "#
B5 3$oose t$e ite% t$at best co%()etes eac$ sentence
1. Most Unted States busnesses are
a) corporatons
b) partnershps
c) soe propretorshps
2. Unmted abty means that the owner
a) has unmted abty to borrow
b) must be abe for hs/her company debts
c) cannot be hed responsbe for hs/her company debts
3. A the foowng are advantages of a soe propretorshp EXCEPT
a) the owner s ony answerabe to hmsef/hersef
b) there s no requrement to submt proft accounts
c) the possbty to have competent empoyees
4. If a sum of money was ent to a soe propretorshp, the responsbty to
repay the oan s assumed
a) by the owner hmsef/hersef
b) by the owners famy members
c) by the owners staff
5. The ma|or factor that dscourages from startng up a soe propretorshp s
a) mted abty to borrow
b) unmted abty
c) mted busness knowedge
6. Empoyees dont want to work for a snge owner because
a) they are gven too many responsbtes
b) they are not pad as they deserve
c) they dont have the chance to be promoted.
III. Fi)) in t$e ga(s 'it$ t$e a((ro(riate 'or+s '$ose (arts o# s(eec$
are given in brac9ets in or+er to #aci)itate 0o&r tas9
1. There are _________ advantages of soe propretorshps. (Numera)
2. It s _________ and reatvey _________ to start and end such form of
busness. (Ad|ectves)
3. A the ___________ go to the owner of busness. (Noun)
4. The soe propretor s free _____________ ______________ about everythng
what refers to hs/her frm. (Verb + noun)
5. The soe propretor pays __________ the tax on hs persona ncome.
(Adverb)
6. The snge owner s sure that compettors ____________ nothng about
hs/her busness pans, profts or other vta facts. (Verb)
I2. No' +escribe t$e +isa+vantages o# a so)e (ro(rietors$i( &sing j&st
one sentence #or eac$ o# t$e%.
2. "IS3USSION
1. What s a start-up fee for a woud-be entrepreneur n our country?
2. Try to anayze the advantages and dsadvantages of a soe propretorshp
by puttng them on the scaes. To your mnd, what pan outweghs - the
one wth advantages or another one wth dsadvantages? Gve your
reasons.
2I. FO3US ON -R/MM/R
3o%(arative an+ S&(er)ative "egrees
/5 3o%()ete t$e sentences &sing a co%(arative #or%: t$e #irst one
$as been +one #or 0o&
1. Its too nosy here. Can we go somewhere quter?
2. Ths coffee s very strong. I ke t a bt ____________
3. The hote was very cheap. I expected t to be ________________
4. I was surprsed how easy t was to get a oan. I thought t woud be
_______________
5. You are standng too near the camera. Can you move a bt
__________________ away?
B5 Use t$e s&(er)ative +egree an+ &n+er)ine t$e correct variant
1. (arge) company n the word s (IBM, Genera Motors, Chryser).
2. (rch) country n the word s (Russa, USA, Luxembourg).
3. (ta) budng n Europe s n (Germany, France, Great Brtan).
4. (USA, Inda, Chna) has (arge) popuaton.
5. (hgh) waterfa n the word s n (South Afrca, USA, Venezuea).
2.2 Partners$i(s
Learning objectives
!. "e#ine t$e 'or+ "artnershi"
2. ;no' +i##erent t0(es o# (artners 'it$in a (artners$i( an+
+isting&is$ bet'een a genera) an+ a )i%ite+ (artner
,. 3o%(re$en+ t$e i%(ortance o# t$e artic)es o# (artners$i(
.. Be a'are o# t$e a+vantages an+ +isa+vantages o# a (artners$i(
St&+0 an+ Learn t$e Wor+s
Eng)is$ Eng)is$ e7&iva)ents Ro%anian R&ssian
to transate to change sth nto a
dfferent form
recept (n) ntrare, vent x
to poo a un, a pune n
comun
1
rea estate avere mobar H
Huc
persona estate avere mob H
Huc
to ncur debts a face dator s r
prospectve partner woud-be partner
to fe a depune, a prezenta c
to draw up a ntocm cc
Secretary of State Secretar de stat IccLn
ck
the terms of the
partnershp
cond[e
parteneratuu
c c
to st a face o st c cck
to spe out to expan sth n a
cear way
to mantan accounts a [ne contabtatea c xrk
to extend credt to end money
concerned (ad|) preocupat, nteresat ckLn,
sacLn
franchse (n) a forma permsson
gven by the
government to sb who
wants to operate a
busness
deceased partner dead partner
The ma|or dsadvantages of a soe propretorshp stem from ts one-person
contro-and the mted amount that one person can do n a workday. One way to
reduce the effect of these dsadvantages s to have more than one owner. Mutpe
ownershp transates nto more tme devoted to managng, more management ex-
pertse, and more capta and borrowng abty.
The Unform Partnershp Act, whch has been adopted by many states, defnes
a "artnershi" as an association o# t'o or %ore (ersons to act as co<
o'ners o# a b&siness #or (ro#it.
There are approxmatey 2 mon partnershps n the Unted States. They
account for about $370 bon n recepts. However, ths form of ownershp s much
ess common than the soe propretorshp or the corporaton. In fact, partnershps
represent ony about 10 percent of a Amercan busnesses.
Athough there s no ega maxmum, most partnershps have ony two
partners. (However, most of the argest partnershps n accountng, aw, and
advertsng have many more than two partners.) Often a partnershp represents a
poong of speca taents, partcuary n such feds as aw, accountng, advertsng,
rea estate, and retang. Aso, a partnershp may resut from a soe propretor
takng on a partner for the purpose of obtanng more capta.
Ty"es of Partners
A partners need not be equa. Some may be fuy actve n runnng the
busness, whereas others may have a much more mted roe.
(eneral Partners A genera) (artner s one who assumes fu or shared
operatona responsbty of a busness. Lke soe propretors, genera partners are
responsbe for operatng the busness. They aso assume unmted abty for ts
debts, ncudng debts that have been ncurred by any other genera partner
wthout ther knowedge or consent. The Unform Partnershp Act requres that
every partnershp have at east one genera partner. Ths s to ensure that the
abtes of the busness are egay assumed by at east one person. Genera
partners are actve n day-to-day busness operatons, and each partner can enter
nto contracts on behaf of a the others. Each partner s taxed on hs or her share
of the proft-n the same way a soe propretor s taxed. (The partnershp tsef
pays no ncome tax.) If one genera partner wthdraws from the partnershp, he or
she must gve notce to credtors, customers, and suppers to avod future abty.
Limited Partners A )i%ite+ (artner s a person who contrbutes capta to
a busness but s not actve n managng t; hs or her abty s li$ited to the
amount that he or she has nvested. In return for ther nvestment, mted partners
share n the profts of the frm.
Not a states aow mted partnershps. In those that do, the prospectve
partners must fe forma artces of partnershp. They must pubsh a notce
regardng the mtaton n at east one newspaper. And they must ensure that at
east one partner s a genera partner. The goa of these requrements s to protect
the customers and credtors of the mted partnershp. Partners can aso be
nomna, ostensbe, actve, secret, dormant, or sent. What type of partner
ndvduas choose to be depends a great dea on how much nvovement they want
n a partcuar busness or what speca abtes they brng to a frm. The sx
dfferent types of partners have the foowng characterstcs:
1 %o$inal partner& not a party to the partnershp agreement or a true
partner n any sense; by addng hs or her name to the partnershp,
becomes abe as f he or she were a partner f persons have gven credt
to the frm because of such representaton
2. 'stensible partner& actve and known to the pubc as a partner
3. (cti)e partner& actve n management but may or may not be known to
the pubc
4. Secret partner& actve, but not known to the pubc as a partner
5. *or$ant partner& nactve and not known as a partner
6. Silent partner& nactve, but may be known to the pubc as a partner
The Partnershi" Agreement
Some states requre that partners draw up arti!les of "artnershi" and fe
them wth the secretary of state. Artces of partnershp are a wrtten agreement
stng and expanng the terms of the partnershp. Even when t s not requred, an
ora or wrtten agreement among partners s ega and can be enforced n the
courts. A wrtten agreement s obvousy preferred because t s not sub|ect to
apses of memory.
The artces generay descrbe each partner's contrbuton to, share of, and
dutes n the busness. They may outne each partner's responsbty-who w
mantan the accounts, who w manage saes, and so forth. They may aso spe
out how dsputes w be setted and how one partner can buy the nterests of
another.
Advantages of Partnershi"s
Ease and Low Cost of Formation Lke soe propretorshps, partnershps
are reatvey easy to form. The ega requrements are often mted to regsterng
the name of the busness and purchasng whatever censes are needed. It may not
even be necessary to consut an attorney, except n states that requre wrtten
artces of partnershp. However, t s generay a good dea to get the advce and
assstance of an attorney when formng a partnershp.
Availability of Ca"ital and Credit Partners can poo ther funds so that
ther busness has more capta than woud be avaabe to a soe propretorshp.
Ths addtona capta, couped wth the genera partners' unmted abty, can
form the bass for a good credt ratng. Banks and suppers may be more wng to
extend credt or grant szabe oans to such a partnershp than to an ndvdua
owner.
Ths does not mean that partnershps can easy borrow a the money they
need. Many partnershps have found t hard to get ong-term fnancng smpy
because enders worry about enterprses that take years to earn a proft. But, n
genera, partnershps have greater assets and so stand a better chance of
obtanng the oans they need.
Retention of Profits As n a soe propretorshp, a profts beong to the
owners of the partnershp. The partners share drecty n the fnanca rewards.
Thus they are hghy motvated to do ther best to make the frm succeed.
Personal )nterest Genera partners are very much concerned wth the
operaton of the frm-perhaps even more so than soe propretors. After a, they
are responsbe for the actons of a other genera partners, as we as for ther
own.
Combined %usiness $ills and &nowledge Partners often have compe-
mentary sks. If one partner s weak n, say, fnances, another may be stronger n
that area. Moreover, the abty to dscuss mportant decsons wth another
concerned ndvdua often takes some of the pressure off everyone and eads to
more effectve decson makng.
Possible Tax Advantages Lke soe propretors, partners are taxed ony on
ther ndvdua ncome from the busness. The speca taxes such as the state
franchse tax that corporatons must pay are not mposed on partnershps. Aso, at
certan eves of ncome, the new federa tax rates are ower for ndvduas than for
corporatons.
Disadvantages of Partnershi"s
#nlimited Liability As we have noted, each genera partner s personay
responsbe for a debts of the busness, whether or not that partcuar partner
ncurred those debts. Genera partners thus run the rsk of havng to use ther
persona assets to pay credtors. Lmted partners, however, rsk ony ther orgna
nvestment.
La!$ of Continuity Partnershps are termnated n the event of the death,
wthdrawa, or egay decared ncompetence of any one of the genera partners.
However, that partner's ownershp share can be purchased by the remanng
partners. In other words, the aw does not automatcay provde that the busness
sha contnue, but the artces of partnershp may do so. For exampe, the
partnershp agreement may permt survvng partners to contnue the busness
after buyng a deceased partner's nterest from hs or her estate. However, f the
partnershp oses an owner whose specfc sks cannot be repaced, t s not key
to survve.
Effe!ts of *anagement Disagreements The dvson of responsbtes
among severa partners means the partners must work together as a team. They
must have great trust n each other. If partners begn to dsagree about decsons,
poces, or ethcs, dstrust may coud the horzon. Such a mood tends to get worse
as tme passes - often to the pont where t s mpossbe to operate the busness
successfuy. To reduce dsagreements, a number of ssues can be setted when
formng the partnershp.
Fro+en )nvestment It s easy to nvest money n a partnershp, but t s
sometmes qute dffcut to get t out. Ths s the case, for exampe, when remanng
partners are unwng to buy the share of the busness that beongs to the partner
who s eavng. To prevent such dffcutes, the procedure for buyng out a partner
shoud be ncuded n the artces of partnershp.
In some cases, a partner must fnd someone outsde the frm to buy hs or her
share. How easy or dffcut t s to fnd an outsder depends on how successfu the
busness s.
I. 2O3/BUL/R4 PR/3TI3E
/5 E6()ain t$e %eaning o# t$e #o))o'ing ($rases o# 'or+s
1. to ncur debts
2. partnershps fnd t hard to get ong-term fnancng
3. to stand a better chance of dong sth
4. to be hghy motvated to do ones best
5. dstrust may coud the horzon
6. to have a good credt ratng
7. to have compmentary sks
8. frozen nvestment
B5 Fin+ in t$e te6t s0non0%o&s ($rases to t$e #o))o'ing
1. to concude a contract
2. to gve bg oans
3. to be reuctant to purchase sth
4. to nform enders
5. to eave a partnershp
35 In eac$ $ori1onta) gro&( &n+er)ine t$e o++ 'or+ ='$ic$ +oes not
be)ong to t$e gro&( o# s0non0%s5
1. partner soe propretor owner master
2. her successor egatee
egator
3. proft ncome revenue
recept
4. dspute dfference dscharge
dsagreement
5. capta nvestment fund
mortgage
6. to found to estabsh to form up to put up
7. abe answerabe anguorous
responsbe
8. dssouton canceaton ds|uncton
termnaton
9. extenson property estate
ownershp
10. expertse expanaton experence competence
II. 3OMPREHENSION
/5 /ns'er t$e #o))o'ing 7&estions
1. What s a partnershp?
2. What s the ega maxmum of co-owners n a partnershp?
3. What are the two man types of partners and what s the dfference
between them?
4. How s each partner taxed?
5. What must the genera partner do f he wants to wthdraw from a
partnershp?
6. What are the artces of partnershp and what do they descrbe?
7. What are the smartes and the dfferences between advantages and
dsadvantages of a soe propretorshp and partnershp?
8. Why s t sometmes dffcut to get your money out of busness when you
want to wthdraw from a partnershp?
B5 Mar9 t$e state%ents 'it$ TRUE or F/LSE:
1. A partnershp can consst ony of mted partners.
2. Partnershps are the east popuar form of busness ownershp.
3. Partnershps are taxed twce.
4. The status of a genera partner s equa to the status of a mted partner.
5. A partnershp can comprse no more than 4 partners.
6. The share n the proft of a partner depends on the sze of hs/her capta
nvestment.
7. The probem sharng n a partnershp eads to more effectve decson
makng.
8. If a partnershp fas, the debts are pad wth the persona assets of both
genera and mted partner.

35 Un+er)ine t$e correct variant to co%()ete t$e +e#inition
1. Ths partner doesnt exst n reaty, hs name s added to the partnershp
n order to obtan a oan from a bank - (dormant, mted, nomna).
2. Ths partner s actve and everybody knows hm as a partner - (actve,
ostensbe, genera).
3. Ths partner s not actve and rsks ony the orgna nvestment - ( sent,
mted, secret).
III. "IS3USSION
1. If you had a chance to start a busness, woud you ke to be a soe
propretor or to work n a partnershp?
2. When formng a partnershp what knd of partner woud you ke to be - a
genera or a mted one? Gve your reasons.
3. What do you thnk about famy busness when a the partners are famy
members?
Woud you form a partnershp wth your spouse or any other cose
reatve? What confcts may arse n such a partnershp?
4. To your mnd, compatbty between partners - s t mportant or not so
much?
I2. FO3US ON L/N-U/-E
The word ACC'#,T
Matc$ t$e %eaning o# t$e 'or+s in bo)+ 'it$ t$eir +e#inition in t$e
rig$t
1. The consutng company has won 2 new acco&nts n
Sngapore
a) represents
2. On no acco&nt shoud these products be reeased before
they are checked.
b) on credt
3. Labour acco&nts #or 45% of the manufacturng costs. c) because of
4. Mrs Baker s our reguar customer and she may buy on
acco&nt.
d) for themseves
5. B0 a)) acco&nts, we w beneft greaty f we are gong to
expand next year.
e) bg customers
6. Agents buy and se on t$eir o'n acco&nt. f) expan
7. I cannot acco&nt #or ths unexpected decrease n saes. g) consder
8. Our deveopment pro|ect has to be ad|usted on acco&nt o#
the shortage of personne.
h) under no
crcumstances
9. Our soctor has receved a detaed acco&nt of a our new
customers busness deas.
) report
10. A good manager shoud ta9e the good performance of
hs empoyees into acco&nt.
|) peope say
2. 3/SE STU"4
Imagne that you have a partnershp wth your best frend. A serous confct
arose between you due to hs/her dshonest behavour towards you. Rght now you
dont have the money to buy hs/her share of busness and you dont want to se
your share to hm/her because your busness s rather proftabe. What woud you
do n ths stuaton?
2I. TR/NSL/TION
1. Asocatu meu a fcut dator fr trea mea acum eu trebue s e
acht.
Mn s r s Hr H H c
x L.
2. nante de a forma parteneratu eu m-am consutat cu avocatu meu.
H H cs c, kcc c cH
kH.
3. Uneor este destu de dfc s te retrag dn partenerat.
Hr L Ln s c.
4. Eu asocatu meu am hotrt s punem n comun captaur pentru a
prm un credt ma mare de a banc.
Mn u 1 u k, L
cHLn k k.
2II. ROLEPL/4
Work n pars. Imagne that you are a soe propretor and you own a restaurant.
You want to offer 30 percent partnershp to your chef. Dscuss wth hm the terms
on whch you are gong to start a mutuay proftabe busness. Use the foowng
questons:
How w the profts be dvded between partners?
Who w approve payments and sgn checks?
W profts be poured back nto busness or dstrbuted to partners?
Whch empoyees w report to whch partners?
How w the responsbtes be dvded between partners?
What happens f one partner s dssatsfed wth the way another partner
handes a partcuar responsbty?
How much tme w each partner be requred to devote to busness?
If the busness goes rough, how w the partners decde whether to gve
up or to try to turn t around?
How w the confcts be setted? W they be ended by deferrng to the
partner wth the most expertse n the matter or by a neutra expert thrd
party?
2.,. 3ORPOR/TIONS
Learning objectives
!. "e#ine s&c$ #or% o# b&siness o'ners$i( as !or"oration
2. 3o%(re$en+ $o' a cor(oration is #or%e+* '$o o'ns it* an+ '$o
is res(onsib)e #or its o(eration
,. Be a'are o# stoc9$o)+ers> rig$ts
.. Recogni1e t$e basic str&ct&re o# a cor(oration

St&+0 an+ Learn t$e Wor+s
English English
equivalents
Romanian Russian
to derve from sth to come or deveop
from sth
to pague to create probems
restrant (n) restrc[e, mt r
to hnder a mpedca Hu,
c
to despose of
property
a dspune de
propretate
cc
ccck
bndng (ad|) on sb care anga|eaz dn
punct de vedere
|urdc
sLn c
kckn k
s
to ssue stock a emte ac[un Lck ku
return (n) ncome
the naton (n) the USA
enent (ad|) ndugent, ngdutor ccxLn
headquarters (n) sedu prncpa u-k,
rLn qc
to entte sb to sth to gve sb the rght
to do sth
common stock ac[un obnute,
ordnare
cL ku
preferred stock ac[un prvegate rL
ku
cam on sth preten[e, drept s,
ssue (n) queston, matter
proxy (n) procur c
Board of drectors Consu de
admnstra[e
C k
to set a goa a stab un scop c u
to deveop a pan a eabora un pan s
to trade a comercaza r
corporate offcer a person who s n a
poston of authorty
n a corporaton
func[onar a
corpora[e
cun ku
charman (n) preednte c

treasurer (n) fnanca manager

to carry out a strategy a reaza o stratege s
crk
to report to sb a f n subordnea
cuva
c kH-,

stockbroker (n) agent de schmb
(pentru ac[un)
n Hk,
k
to rase capta to coect money
ega person persoan |urdc kck u
natura person persoan fzc qsck u
uness f not
to recrut to fnd new
empoyees for a
company
n effect de fapt cuc,
ncc
perpetua (ad|) eterna,
ntermnabe
to take sth over to gan contro of a
company by buyng
ts shares
The advantages of a partnershp over a soe propretorshp derve many from
the added capta and expertse of the partners. However, some of the basc
dsadvantages of the soe propretorshp aso pague the genera partnershp.
Unmted abty and restrants on capta resources and borrowng, for exampe,
can hnder a partnershp's growth. A thrd form of busness ownershp, the
corporaton, succeeds n overcomng some of these dsadvantages.
3or(oration s an artfca person created by aw, wth most of the ega
rghts of a rea person. These ncude the rght to start and operate a busness, to
own or dspose of property, to borrow money, to sue or be sued, and to enter nto
bndng contracts. Unke a rea person, however, a corporaton exsts ony on
paper.
There are more than 3.2 mon corporatons n the Unted States. They
comprse ony about one-ffth of a busnesses, but they account for more than
nne-tenths of a saes revenues and more than three-quarters of a busness
profts.
3or(orate o'ners$i( The shares of ownershp of a corporaton are caed
ts stoc9. The peope who own a corporaton's stock-and thus own part of the
corporaton- are caed ts stoc9$o)+ers* or sometmes ts sharehoders# Once a
corporaton has been formed, t may se ts stock to ndvduas. It may aso ssue
stock as a reward to key empoyees n return for certan servces, or as a return to
nvestors (n pace of cash payments).
A cose corporaton s a corporaton whose stock s owned by reatvey few
peope and s not traded openy (that s, n stock markets). A person who wshes to
se the stock of such a corporaton generay arranges to se t prvatey, to
another stockhoder or a cose acquantance.
An open corporaton s one whose stock s traded openy n stock markets and
can be purchased by any ndvdua. Genera Motors, the argest ndustra company
n the USA, s an exampe. Most arge frms are open corporatons, and ther
stockhoders may number n the mons. For exampe, AT&T s owned by more
than 3 mon sharehoders.
Forming a !or"oration
The process of formng a corporaton s caed incor(oration. The peope who
actuay start the corporaton are ts incorporators# They must make severa
decsons about the corporaton before and durng the ncorporaton process.
-here to )n!or"orate A busness s aowed to ncorporate n any state t
chooses. Most sma and medum-szed busnesses are ncorporated n the state
where they do the most busness. However, the founders of arger corporatons, or
of those that w do busness natonwde, may compare the benefts provded to
corporatons by varous states. Some states are more hosptabe than others, and
some offer ow taxes and other benefts to attract new frms. Deaware s
acknowedged as offerng the most enent tax structure. A huge number of frms
(more than 75,000) have ncorporated n that state, even though ther corporate
headquarters may be ocated n another state.
An ncorporated busness s caed a +o%estic cor(oration n the state n
whch t s ncorporated. In a other states where t does busness, t s caed a
#oreign cor(oration. Scars, Roebuck, for exampe, s ncorporated n New York,
where t s a domestc corporaton. In the remanng forty-nne states, t s a foregn
corporaton. A corporaton chartered by a foregn government and conductng
busness n the Unted States s an a)ien cor(oration. Vokswagen, Sony, and
Toyota are exampes of aen corporatons.
The Cor"orate Charter Once a "home state" has been chosen, the ncor-
porators submt articles of incorporation to the secretary of state. If the artces of
ncorporaton are approved, they become the frm's corporate charter. A
cor(orate c$arter s a contract between the corporaton and the state, n whch
the state recognzes the formaton of the artfca person that s the corporaton.
Usuay the charter (and thus the artces of ncorporaton) ncudes the foowng
nformaton:
- Frm's name and address
- The ncorporators' names and addresses
- The purpose of the corporaton
- The maxmum amount of stock and the types of stock to be ssued
- The rghts and prveges of sharehoders
- How ong the corporaton s to exst (usuay wthout mt)
Each of these key detas s the resut of decsons that the ncorporators must
make as they organze the frm-before the artces of ncorporaton are submtted.
Let us ook at one area n partcuar: stockhoders rghts.
to!$holders. Rights There are two basc knds of stock. Each type enttes
the owner to a dfferent set of rghts and prveges. The owners of co%%on stoc9
may vote on corporate matters, but ther cams on proft and assets are subordnate
to the cams of others. Generay, an owner of common stock has one vote for each
share owned. A common stock owners receve dvdends but the amount of these
dvdends depends on the proftabty of the company. The owners of (re#erre+
stoc9 usuay do not have votng rghts, but ther cams on proft and assets take
precedence over those of common-stock owners. Preferred stock often pays a ower
proft return than common stock dvdends but that return s fxed and guaranteed.
Perhaps the most mportant rght of owners of both common and preferred
stock s to share n the proft earned by the corporaton. Other rghts ncude beng
offered addtona stock n advance of a pubc offerng +pre,e$pti)e rights-;
examnng corporate records; votng on the corporate charter; and attendng the
corporaton's annua stockhoders' meetng, where they may exercse ther rght to
vote.
Because common stockhoders usuay ve a over the naton, very few
actuay attend the annua meetng. Instead, they vote by proxy. A (ro60 s a ega
form that sts ssues to be decded and requests that stockhoders transfer ther
votng rghts to some other ndvdua or ndvduas. The stockhoder regsters hs
or her vote and transfers hs or her votng rghts smpy by sgnng and returnng
the form.
'rgani+ational *eeting As the ast step n formng a corporaton, the
orgna stockhoders meet to eect ther frst board of drectors. (Later, drectors
w be eected or re-eected at the corporaton's annua meetngs.) The board
members are drecty responsbe to the stockhoders for the way they operate the
frm.
Cor"orate stru!ture
%oard of Dire!tors The boar+ o# +irectors s the top governng body of a
corporaton, and, as we noted, drectors are eected by the sharehoders. A
corporaton s an artfca person. Thus t can act ony through ts drectors, who
represent the corporatons owners. Board members can be chosen from wthn the
corporaton or from outsde t.
Drectors who are eected from wthn the corporaton are usuay ts top
managers-the presdent and executve vce presdents, for exampe. Those who
are eected from outsde the corporaton are generay experenced managers wth
proven eadershp abty and/or specfc taents that the organzaton seems to
need. In smaer corporatons, ma|orty stockhoders may aso serve as board
members.
The ma|or responsbtes of the board of drectors are to set company goas
and deveop genera pans (or strateges) for meetng those goas. They are aso
responsbe for the overa operaton of the frm.
Cor"orate 'ffi!ers A cor(orate o##icer s apponted by the board of
drectors. The charman of the board, presdent, executve vce presdents, and
corporate secretary and treasurer are a corporate offcers. They hep the board
make pans, carry out the strateges estabshed by the board, and manage day-to-
day busness actvtes. Perodcay (usuay each month), they report to the board
of drectors. And once each year, at an annua meetng, the drectors report to the
stockhoders. In theory, then, the stockhoders are abe to contro the actvtes of
the entre corporaton through ts drectors.
I. 2O3/BUL/R4 PR/3TI3E
/5 Fin+ in t$e te6t s0non0%s =!<?5 an+ anton0%s =@<!25 to t$e
#o))o'ing
1. restrcton 7. natura
2. to possess 8. to end
3. am 9. from wthn (the company)
4. power of attorney 10. pubcy
5. to acheve a goa 11. tny (ad|)
6. whoe (ad|) 12. to forbd
B5 3$oose t$e correct %eaning o# t$e #o))o'ing 'or+s
1. to hinder means:
a) to be very common at a partcuar tme;
b) to make t dffcut for sth to happen;
c) to understand the core of the stuaton.
2. to sue means:
a) to brng an acton aganst sb;
b) to brng sth nto force;
c) to brng the matter forward.
3. lenient means:
a) generous and frendy;
b) usng strong pressure;
c) not as strct as expected.
4. to sub$it means:
a) to draw up a document;
b) to present a document;
c) to sgn a document.
5. to attend means:
a) to be present at an event;
b) to guess sth from an avaabe nformaton;
c) to send sb a message.
II. 3OMPREHESION
/5 -ive 'or+s to t$e #o))o'ing +e#initions
1. A arge busness company .......................................
2. A person who owns shares of a company .............
3. The process of formng a corporaton .............
4. A contract between the state and the corporaton whch gves to the atter
the ega status .............
5. A group of peope who have power to make decsons and contro a
corporaton ...........
6. A ega document through whch a sharehoder gves the authorty to
some other ndvdua to vote nstead of hm ............
B5 /ns'er t$e #o))o'ing 7&estions
1. What s the dfference between a cose and an open corporaton?
2. Who are ncorporators?
3. Why have most Amercan companes ncorporated n Deaware? What do
you know about ths state?
4. What s the dfference between domestc, foregn and aen corporatons?
5. What nformaton does the corporate charter ncude?
6. What rghts do stockhoders have?
7. In your opnon, what type of stock - common or preferred do the
stockhoders prefer to buy and why?
8. What does t mean to vote by proxy?
9. Arrange the foowng persons accordng to the herarchy of corporate
structure:
a) corporate offcers
b) stockhoders
c) workers
d) board of drectors.
To your mnd, can a corporaton be effectvey controed under such a
system of eves?
10. What are the prmary responsbtes of a corporatons board of
drectors?
35 Mar9 t$e state%ents 'it$ TRUE or F/LSE
1. The ncorporators are the prmary sharehoders of the corporaton.
2. A corporaton chartered by a foregn government n the USA s caed a
foregn corporaton.
3. A stockhoders of a corporaton have the rght to vote at the companys
Annua Meetng.
4. The charman of the board s a corporate offcer.
5. Most arge frms n the USA are cose corporatons.
6. Stockhoders may aso serve as members of the board of drectors.
7. A corporaton may comprse no more than 1 mon sharehoders.
8. Board members are chosen ony from wthn the corporaton.
/+vantages o# 3or(orations
Learning objectives
!. ;no' a+vantages an+ +isa+vantages o# a cor(oration
2. -ras( t$e limited liability conce(t
Limited Liability One of the most attractve features of corporate ownershp
s mted abty. Each owners fnanca abty s mted to the amount of money
she or he has pad for the corporatons stock. Ths feature arses from the fact that
the corporaton s tsef a ega beng, separate from ts owners. If a corporaton
shoud fa, credtors have a cam ony on the assets of the corporaton, not on the
persona assets of ts owners.
Ease of Transfer of 'wnershi" Let us say that a sharehoder of a pubc
corporaton wshes to se hs or her stock. A teephone ca to a stockbroker s a
that s requred to put the stock up for sae. There are usuay wng buyers
avaabe for most stocks, at the market prce. Ownershp s transferred
automatcay when the sae s made, and practcay no restrctons appy to the
sae and purchase of stock.
Ease of Raising Ca"ital The corporaton s by far the most effectve form of
busness ownershp for rasng capta. Lke soe propretorshps and partnershps,
corporatons can borrow from endng nsttutons. However, they can aso se
stock to rase addtona sums of money. Indvduas are more wng to nvest n
corporatons than n other forms of busness because of the mted abty that
nvestors en|oy and because of the ease wth whch they can se ther stock.
Per"etual Life Because a corporaton s essentay a ega "person," t exsts
ndependenty of ts owners and survves them. Uness ts charter specfes
otherwse, a corporaton has perpetua fe. The wthdrawa, death, or
ncompetence of a key executve or owner s not cause for the corporaton to be
termnated. Sears, Roebuck, ncorporated amost a century ago, s one of the
natons argest retang corporatons, even though ts orgna owners, Rchard
Sears and Avah Roebuck, have been dead for decades.
"e!iali+ed *anagement Typcay, corporatons are abe to recrut more
sked and knowedgeabe managers than propretorshps and partnershps. Ths s
because they have more avaabe capta and are arge enough to offer
consderabe opportunty for advancement. Wthn the corporate structure,
admnstraton, human resources, fnance, saes, and operatons are paced n the
charge of experts n these feds. For nstance, the Bechte Group hred Caspar
Wenberger, former Secretary of Defense.
"isa+vantages o# 3or(orations
Diffi!ulty and Ex"ense of Formation Formng a corporaton can be a re-
atvey compex and costy process. The use of an attorney may be necessary to
compete the ega forms and appy to the state for a charter. Charter fees,
attorneys fees, the costs of stock certfcates and requred record keepng, and
other organzatona costs a add up. These payments can amount to thousands of
doars for even a medum-szed corporaton. The costs of ncorporatng, n both
tme and money, dscourage many owners of smaer busnesses from formng
corporatons.
(overnment Regulation Most government reguaton of busness s drected
at corporatons. A corporaton must meet varous government standards before t
can se ts stock to the pubc. Then t must fe many reports on ts busness
operatons and fnances wth oca, state, and federa governments. In addton, the
corporaton must make perodc reports to ts stockhoders about varous aspects of
the busness. Aso, ts actvtes are restrcted by aw to those speed out n ts
charter.
Double Taxation Unke soe propretorshps and partnershps, corporatons
must pay a tax on ther profts. Then stockhoders must pay a persona ncome tax
on profts receved as dvdends. As a resut, corporate profts are taxed twce-
once as corporate ncome and agan as the persona ncome of stockhoders.
La!$ of e!re!y Because open corporatons are requred to submt detaed
reports to government agences and to stockhoders, they cannot keep ther
operatons confdenta. Compettors can study these requred corporate reports
and then use the nformaton to compete more effectvey. In effect, every pubc
corporaton has to share some of ts secrets wth ts compettors.
I. 2O3/BUL/R4 PR/3TI3E
Fin+ in t$e te6t t$e Eng)is$ e7&iva)ents #or t$e #o))o'ing ($rases o#
'or+s
1. A revendca propretatea corpora[e/ ccc
ku;
2. A expune ac[une pentru vnzare/Lc ku ;
3. Doar dac n carta corpora[e nu este prevzut atceva/c k
c ku cH ;
4. A corespunde standarteor de stat/cc rccLH
cH;
5. Actvt[e stpuate n carta corpora[e /c, r
c ku;
6. Fostu Mnstru a Aprr/Lun Hc L.
II. 3OMPREHENSION
Matc$ t$e 'or+s 'it$ t$eir +e#initions
1. mted abty a) the effectve management commttee of a corporaton
2. endng nsttutons b) f the company fas, credtors have a cam on the persona
assets of ts owners
3. stockbroker c) the hghest poston on a companys board of drectors
4. unmted abty d) f the company goes bankrupt, the sharehoders cannot be asked
to pay more than the nomna vaue of ther shares
5. dvdend e) banks, nsurance companes, budng socetes
6. management f) a person who buys and ses stocks for other peope
7. charman g) an amount of the profts that a company pays to ts sharehoders
8. board of drectors h) the peope who run and contro an organzaton
III. 3o%()ete t$e tab)e 'it$ t$e a((ro(riate 'or+s +escribing t$e
()&ses an+ %in&ses o# t$e cor(oration stat&s. =Fig&res +enote t$e
n&%ber o# 'or+s5
/+vantages "isa+vantages
1. Lmted (1) 1. Its profts are (2)
2. Unmted (1) 2. Dffcut and (2)
3. Unmted abty (1) 3. Its actvtes are controed by (1)
4. Abty to recrut (2) 4. Impossbty to keep ts (2)
5. Lack of dffcuty n (2)
I2. FO3US ON -R/MM/R
3o%()ete t$e sentences &sing an a+jective #ro% bo6 / an+ a
(re(osition #ro% bo6 B
/ B
smar of
nterested wth
crtca for
good about
responsbe from
serous at
satsfed to
bndng n
dfferent on
1. Coud you te me who s _____________________________ customer
compants?
2. My current |ob s very _________________________________ my prevous one.
3. Last month the companys saes dropped dramatcay. Ths s ony
___________________ a sump regstered 5 years ago.
4. Our sharehoders are greaty ________________ the proft and oss account
we pubsh twce a year.
5. The charman opened the meetng by sayng he was ____________________
the progress made.
6. The press were _________________________ the company because staff
tranng had not mproved.
7. My manager s _______________________ frng 2 peope.
8. Tom was apponted as presdent of our corporaton because he s very
_______________ eadng and motvatng peope.
9. The contract comes nto force on the day of ts sgnature and s
_________________ both partes.
RE2ISION
Learning objectives
!. Un+erstan+ t$e basic +i##erences a%ong t$e , #or%s o# b&siness
o'ners$i(
2. -ive arg&%ents #or t$eir c$oice o# t$e %ost a+vantageo&s #or%
o# b&siness o'ners$i(
I. Fi)) in t$e ga(s 'it$ t$e necessar0 'or+s
Busnesses are organzed n dfferent ways. When there s one owner, the
company s caed a .(1) propretorshp. If two or more peope assocate to form a
company they make up a .(2). In both these organzatons the .(3) suppy the
capta and as a rue they assume the management of the organzaton. They aso
have .(4) abty and are entted to take possesson of a the profts the
company makes and a . (5) are borne by them.
On the other hand there are mted .(6) companes. Such types of companes
are ether .(7) or pubc. The former type nvoves that the pubc has not .(8) to
the company, the shares are sod to a restrcted number of peope. .(9) are the
parts nto whch the assets of a company are dvded. The owners of the company
are .(10) and they hod shares n proporton wth the .(11) they nvested n the
company. The management of mted abty company s entrusted to a .(12) of
drectors eected by the .(13) at the Annua Meetng. A sharehoder who cannot
attend the meetng may vote by .(14).
The sharehoders are entted to the .(15) made by the company and
therefore receve .(16). When a stockhoder s offered addtona stock n advance
of pubc t means that he has a .(17) rght.
II. W$at is t$e &s&a) anton0% in t$e #o))o'ing (airs8
1. genera partner and
2. common stock and
3. prvate corporaton and
4. short-term fnancng and
5. formaton and
6. to borrow and
7. empoyer and
8. proft and
III. 3o%()ete t$e #o))o'ing c$art
Chara!teristi!s ole
"ro"rietorshi"
Partnershi" Cor"oration
1. The number of owners
2. Organzatona documents
3. Taxes pad
4. Labty
5. Abty to borrow
6. Government contro
7. The most wdespread form
of dong busness
8. The most proftabe form
of dong busness
I2. "IS3USSION
1. What knd of organzaton woud you ke to work for (as an empoyee) n
the future?
2. What do you thnk your frst poston w be?
3. Do you expect to have one mmedate boss, to work for more than one
superor, or to be part of a team?
4. Woud you ke to work for an organzaton where managers and workers
are treated as equas or n a company n whch there are status symbos
such as bg offces and company cars for senor staff? Gve your reasons.
5. In Amercan corporatons empoyees are offered a consderabe
opportunty for promoton. What are the chances to advance n our
Modavan corporatons, say from a smpe worker to a member of the
board?
6. If you were to start a busness, whch ownershp form woud you use?
What factors mght affect your choce of ownershp form?
2. 3/SE STU"4
Imagne fndng yoursef n the foowng stuaton: you are an executve vce
presdent n a corporaton A, whch s not very successfu. Another bg corporaton-
compettor B wants to take over the corporaton you work n. They propose you to
gve away a the secret fnanca nformaton and for ths they promse you the
poston of the charman of the board n the new bg corporaton. Besdes you w
be offered 3% of corporatons shares. What woud you do n ths stuaton?
2I. RE/"IN-
/rrange t$e #o))o'ing (aragra($s into a co$erent te6t an+ entit)e it
(1) An ndvdua ke Henry Ford mght want to begn a sma enterprse
and personay retan tota responsbty, but once t starts to grow, a
partnershp or a corporaton woud need to be formed. The key factor n
ownng any company s the guarantee caed li$ited liability: the owners
of a company never have to pay more than they have nvested n the
company. Ther abtes are mted. When a company goes bankrupt,
the owners can never be requred to pay ts unpad bs.
(2) Many countres make a cear dstncton between pubc and prvate
companes, wth separate desgnatons such as AG and GmbH n
Germany, or Pc and Ltd n Brtan. Pubc companes are those arge
enough to have ther shares traded on stock exchanges. The shares of
prvatey owned companes are not avaabe to the genera pubc. In the
USA the dstncton between pubc and prvate companes s not so great,
that s why most companes smpy bear the tte Inc or "Incorporated".
(3) The heart of captasm s prvate ownershp and a Lmted Labty
Company aows peope to own amost anythng - from skyscrapers to
teevson statons - wthout rskng ther persona assets shoud the
company go bankrupt.
(4) The names of companes around the word refect ths guarantee of
mted abty. The abbrevatons "GmbH" n Germany, "Inc" n the USA,
or "Ltd." n most other Engsh-speakng countres, "SRL" n Modova and
Romana ndcate that the frm s mted abty company and nvestors
have nothng more to ose than the money nvested n ther shares. The
"S.A." n French and Spansh-speakng countres aso refers to mted
abty by defnng sharehoders as "anonymous". Snce the dentty of
sharehoders can be kept secret, the credtors of a bankrupt company
have no rght to pursue them for the companys unpad debts.
(5) The worst that can happen to nvestors n a mted abty company s
osng ther nta nvestment f the company fas. By mtng the
downsde rsk for sharehoders, companes are abe to attract nvestors
and rase arge amounts of funds through saes of shares rather than by
borrowng money at potentay hgh nterest rates.
2II. FO3US ON L/N-U/-E
F n to run or to do n the foowng sentences:
1. I .... freeance work n my spare tme.
2. I ..... my own company from home.
3. My frend ...... an agency for computer programs.
4. What do you ..... for a vng?
5. Who .... the busness when you are away?
6. I have been ....... busness wth ths French frm for 2 years.
7. The busness doesnt..... tsef, you know!
8. The coege ... anguage courses for foregn students.
9. Our van ... on dese.
10. The car was ....... 90 mes an hour.