Stocks and shares
To start with I’d like to remind you briefly what kinds of companies exist in our society. I suppose it’s of importance because choosing where to invest money first of all we should analyse the activity of the companies, there liability for debts if going bankrupt, the way of making decisions… On the whole we can distinguish between limited and unlimited companies according to their liability for debts. If declared bankrupt the owners of unlimited company may have to sell nearly all their possessions in order to pay their debts. As for a limited company, it’s a legal entity separated from its owners, and is only liable for the amount of capital that has been invested in it. If a limited company goes bankrupt, it is wound up and its assets are liquidated. And if the assets don’t cover the liabilities or the debts, they remain unpaid.
Most companies begin as private limited companies and their owners have to put the capital themselves or borrow from a bank, for instance specializing in venture capital. The founders have to write a Certificate of Incorporation which states the company’s name, its purpose, its registered office or premises, and the amount of authorized share capital. In Bylaws the duties of directors and the rights of shareholders are set up. All these documents are sent to the registrar of companies.
A successful, growing company can apply to a stock exchange to become a public limited company (GB) or a listed company (US). Newer and smaller companies usually join ‘over-the-counter’ markets, such as the Unlisted Securities Market in London or Nasdaq in New York. Very successful businesses can apply to be quoted or listed on major stock exchanges. To paraphrase it, this gives companies a chance to have their shares traded. Publicly quoted companies have to fulfil a large number of requirements, including sending their shareholders an independently-audited report every year, containing the year’s trading results and a...