Participles

Present Participle (Active)

is has

Mary was the receptionist. She had to arrive on time.

will be will have

has

Being the receptionist, Mary had to arrive on time.

will have

isn't doesn't

Mary wasn't the director. She didn't have her own office. .

won't be won't

doesn't

Not being the director, Mary didn't have to arrive on time.

will

Exercise 4. Make new sentences using the Present Active Participle.

Example: We thought the bus had left. We took a cab.

Thinking the bus had left, we took a cab.

1. I knew the director had already left. I didn't try to call his office.

2. Mr. Berg is on the Board of Directors. He makes very important decision.

3. John didn't understand the problem. He wasn't able to solve it.

4. I'll be a member of the country club; I'll be able to use the golf course next summer.

5. The secretary tried to get to the office on time. She drove too fast and got a ticket.

6. We considered the rising cost of gasoline. We thought about buying a small car.

7. Janet works for an advertising agency. She has the opportunity to meet many interesting people.

Perfect Participles (Active)

He

has had

finished his work. He

is leaving left

the office.

is leaving

Having finished his work, he the office.

left

He

hasn't hadn't

finished his work. He

is staying stayed

late.

is staying

Not having finished his work, he late.

stayed

Exercise 5.

Example: We had missed the bus, so we called a cab.

Having missed the bus, we called a cab.

1. I've seen the movie twice. I'm not going to see it again.

2. I hadn't had any lunch, so I was hungry all afternoon.

3. Johnson has been with the company for 20 years. He's eligible for retirement.

4. We hadn't read the newspaper, so we didn't know about the accident.

5. The director had read all the recommendations very carefully. He was ready to make the decision.

Text № 3

The problem of cash flow

1. The last time I spoke to you, I told you about the different kinds of company and, in particular, we talked about the meaning of "limited" and "unlimited" companies and the difference between public and private limited companies. I hope all that is still clear in your minds. We came across the subject of a legal document called the Memorandum of Association, by which a new business is registered, and I promised to explain what this is today. So I'll do that now, as well as bringing in another, similar document that has to be submitted also. But first I should tell you that the name given to the people who are going to start a new company is promoters, the same name as we give to people organising a boxing match. And it is these promoters who have to complete all the necessary documents and submit them to the Registrar of Companies. The word "registrar" comes from the verb "register". Right, so promoters submit the documents to the Registrar, who in England is an official of the Department of Trade, which is part of the government.

2. So, now let's look at the first of these documents, the Memorandum of Association, which defines what the company is and what it can do. There are several items it must contain:

3. First, it must state the company's name, followed by the word "public limited company" or just "limited", depending on the type of company. We talked about this last time. Incidentally, the name of the company has to be approved, and if the Registrar thinks a name is misleading or has already been used, he may refuse it and ask for a change.

4. Second, it must state the place where the company's registered office – its legal home – is to be. It may sound odd, but the registered office does not have to be anywhere near where the business is to be carried out. But there must be an address, and this must be stated in the Memorandum.

5. Next. We have the objects clause, which states what the company is set up to do, and what powers it is to have. This is very important; if the company tries to do things not allowed for in this clause, they may be declared outside its power – or ultra vires, as the legal Latin puts it. A lot of English legal jargon uses Latin terms. It is quite possible to change the stated objects by special resolution, but most companies make the objects so broad in the first place that this is not very often necessary.

6. The Memorandum of Association must state that members have limited liability. And there must be a statement of the nominal capital, that is, the value of the shares it has authority to issue, and how this is to be divided. This can be changed later. For instance, the amount of capital can be increased.

7. Finally, the document must end with a request by the subscribers – that's the people who want to form the company – together with their names and addresses. They all have to take at least one share, the number of shares has to be stated, and they must all sign the document and have their signatures witnessed by someone else. The Memorandum is then complete.

8. Another similar document that has to be submitted in most cases is the Articles of Association. This states the rules adopted for the internal running of the company. If such a document in not submitted, the company is assumed to have adopted standard procedures, laid down in the Companies Act. This is called "taking Table A".

9. Setting up a business requires money, which we call capital. One sort of capital – share capital – is raised at least in part by issuing, or selling, shares in the company. Each shareholder pays the company for the shares allotted to him, and this money provides the basic finance. In the Memorandum of Association the company has to state its nominal capital, which is the value in shares that it has authorised itself to issue. Notice that term, it means the value of the shares it can issue if it wants to. It doesn't have to issue them all, and certainly not all at once.

10. Let's take the example of a company that declares a nominal capital of 60,000 pounds. This means it has the authority to issue, say, 60,000 shares at 1 pound each. But it may decide to issue only 30,000 at first, since this will provide enough capital for its current needs. So the company's issued capital will be 30,000 pounds and its nominal capital 60,000 pounds. It is the second figure that has to be stated in the memorandum.

11. Why do we use the term "nominal" – from the word "name"? Well, it's to show that there may be a difference between the nominal value of a share and the actual value. For instance, if you have 1 pound shares in a company which is doing very well and paying you lots of dividends, you will be able to sell those shares for very much more that 1 pound each. Unfortunately, if the company does very badly, if there is a crash or the bottom falls out of the market – all the terrible things that the financial press loves to print headlines about – then you would be lucky to find anyone who would pay you anything at all for those shares. So the nominal value is the figure actually printed on the share, but it may have very little relationship to its actual worth.

12. In theory, at least, a company has to keep an amount of money equal to what it received for its shares so that it can pay its debts or buy the shares back if it has to. This is one of the things that the Companies Act controls.

13. When a company invites the public to buy shares, it has to issue detailed information about itself in a brochure called a Prospectus, and this is a very important document. Making false statements in a prospectus in order to persuade people to buy shares is a criminal offence.

14. A shareholder can sell his shares at whatever price he can get for them, without any reference to the company. All this means from the point of view of the company is that the shares are now held by someone else, not by the person who originally bought them. Of course, there are rules controlling exactly how such transfers of shares can be carried out. These are laid down in another important document – the Stock Transfer Act of 1963 – a copy of which is held by the company secretary.

15. Finally, of course, there is the matter of dividends, without which there would be no point in buying shares. These payments, usually annual, should come from profits, either from the current year or set aside from previous years. If they are paid out of capital, this is generally not legal.

Answer the following questions:

1. What money provides the basic finance of the company limited by shares?

2. What is the definition of nominal capital?

3. What is the definition of issued capital?

4. Is the actual worth of a share usually the same as its nominal value?

5. Why does a company have to keep an amount of money equal to what it received for its shares?

6. Why is Prospectus a very important document?

7. What does the Stock Transfer Act control?

8. What capital should annual dividends come from?

Write out the names and the contents of the documents which a company has to issue.

Text № 4