ДОПОЛНИТЕЛЬНЫЕ МАТЕРИАЛЫ

3 year

Part I. Company Law (Corporate Law)

First review the matters and issues related to types of business organizations that were covered last year.

(АЯЮ стр. 76-85)

Corporations

What kind of business entity is it?

How is it formed?

What are the major traits of a corporation?

Who does a corporation consist of?

Who bears the liability in case of company failure? What does limited liability mean?

Exercise 1. Activating the chart.

The following texts should be completed with the appropriate words from each box.

Shareholders Shareholders own stock (called shares, or ownership interests) in the corporation. Shareholders have the exclusive right to make the following decisions: - elect and remove directors - amend the articles of incorporation and bylaws - approve the sale of all or substantially all of the corporate assets - approve reorganizations, and - dissolve the corporation. Shareholders are paid dividends out of the company’s profits.

A) Shareholders

Corporation owners are its shareholders. The shareholders own ….., or ……in the corporation. This ownership provides them with the most important right – the right to vote. Shareholders voting typically takes place at an annual meeting, when certain corporate decisions are made. For example, after incorporation at the first meeting they …. the directors who manage the corporation, and …. ..the bylaws of a corporation. Later, in the process of corporation development, the shareholders can ……. a director by voting at an annual meeting. The shareholders can also ……. the bylaws if some changes are necessary. No decision to sell corporate assets is possible to be made without shareholders. They must ….. such decisions as well as decisions to reorganize or ……… a corporation.

Shareholders are paid dividends out of the company’s profits

Directors The board of directors sets policy for the corporation and makes major financial decisions. Function of the Board is to do following: set corporate philosophy and policy select and appoint officers and managers to run company. make major company decisions pay dividends Among other things, the directors: authorize the issuance of stock elect the corporate officers set officer and key employee salary amounts decide whether to mortgage, sell, or lease real estate, and approve loans to or from the corporation

B) Directors

Corporations are governed by directors who are elected by the ………... The directors form the Board whose primary role is to set the ……. ……… and ………. major business and financial decisions. The corporate policy is a plan of action to guide company operation, management and administration. The directors ………. and ……… officers and managers who …… the company, are responsible for day-to-day operation and report to the directors. To compensate them for their services the directors … …… …… for officers and key employees.

Directors must hold meetings at regular intervals as defined in the corporate bylaws and, in addition, may also call special board meetings when necessary. At board meetings, directors discuss problems affecting the corporation and make ………. to solve the problems.

For example, a company expands and needs big amounts of money for the development. The company has two options: it can either borrow money from a bank or it can issue more shares. Then the Board of Directors should either ……. … ……. to a corporation or …………. … …… … ……….. If a company is going to purchase some land, or sell a factory building, or lease a new office, the directors have to decide whether to buy, sell or lease … ……... Directors also decide if a corporation can ……… some real estate to get a big loan.

When a corporation makes a substantial profit the directors have to make a decision whether to … higher ………. to the shareholders, or to retain the profit for some beneficial projects.

The most important duty owed by a director to a corporation is the duty of care. This duty of care requires directors to diligently …… their obligations.

duty of care - обязанность блюсти интересы компании

diligently - старательно

Officers are responsible for the routine operation and management of the corporation. Function of officers and managers: execute corporate philosophy; be in charge and organize the operations of departments, divisions or groups; work out strategies; select employees; The particulars of an officer or manager’s activity depend on the area of responsibility: finance, production, marketing, sales, human resources, research and development. Managing Director appointed by the Board of Directors is responsible for the day-to-day operations of the whole company.