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COMPANY LAW
LECTURES 3-4: COMPANY TYPES; COMPANY
FORMATION

COMPANY TYPES
In law, there are various types of
business entity. For each one there are
different legal arrangements to register
the company, different requirements for
presenting accounts, etc.

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OWNERSHIP
A private business is an entity that is
owned by individuals or a legal person.
In unlimited liability businesses, the
owners are personally and entirely liable
for the debts of the company.
In a limited liability business, the
owners are liable only for the amount of
money they have invested in the business.
SOLE TRADER (U.K.)/
SOLE PROPRIETORSHIP (U.K./U.S.A.)
A single person, who is self-employed,
owns and operates a business
(freelancer)
Legally, the business has no separate
existence from its owner (proprietor)
All debts of the business are the debts of
the owner (full / unlimited liability)

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PARTNERSHIP (U.K. and U.S.A)/
GENERAL PARTNERSHIP (U.S.A.)
Two or more people work together and share
the risks and profits.
This organisation does not have a separate legal
identity from the owners.
The partners are fully liable for (responsible
for) any debts the business has.
In law, this is referred to as unlimited liability.
E.g. lawyers, architects, auditing firms
It is registered with the commercial register.

COMPANY / CORPORATION
(U.S.A.)
The business is a legal entity that is
separate from its owners the
shareholders. The owners are not fully
liable for the debts of the business. Their
liability (potential risk) is restricted to
their share capital (= the amount of
cash that they have contributed to the
company) the owners have limited
liability.

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PRIVATE LIMITED COMPANY
The shares (AmE stocks) are private,
they cannot be bought by the members of
the public.
smaller companies (family-run businesses)
In official documents, the company name
is followed by Ltd (UK) meaning
limited, or Llc (US) meaning limited
liability company.

PUBLIC LIMITED COMPANY
(corporation U.S.A.)
The shares are openly traded on a public
stock exchange.
Large, well known businesses which are run
by managers under the supervision of a
Board of Directors.
The shareholders (US: stockholders)
receive a share of the profits every year
(paid as dividends), and will also get a
capital gain or loss when they sell their
shares.
In official documents, the company name is
followed by PLC (UK) or Inc/Corp (USA)

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FRANCHISE
A business arrangement in which the
business owner (franchiser) allows
other people (franchisees) to set up in
business using the companys brand
name, products and reputation. The
franchisee has varying degrees of control
over how products are marketed and
sold.
E.g. McDonalds, the Body Shop.

NON-PROFIT ORGANISATION
An organisation, usually a charity, that
raises funds and offers products and
services, but does not have to make a
profit to stay in business.
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PRACTICE: agreement; cash; debts; on your own; owners; personal;
publicly; separate; shareholding

WORKING FOR YOURSELF

If you work for yourself, you are self-employed either as
a sole trader or a freelancer. The technical term for your
business is a sole proprietorship. You automatically
become a sole trader when you register a trade with the
trade office and manage the business (1). However,
German law regards some self-employed people e.g.
journalists, architects, translators and teachers differently.
These people are freelancers. They do not need to
register with the trade office. A tax number from the
local tax office is sufficient. As a self-employed person you
have unlimited liability for your (2).
PRACTICE: agreement; cash; debts; on your own; owners;
personal; publicly; separate; shareholding
PARTNERSHIPS

These business organisations do not have separate legal
identity from the people who form them. This means that the
partners are liable for the debts of the firm with their (3)
assets. A partnership which is not registered with the
commercial register is a GbR (civil law partnership). A written
partnership (4) is recommended but it is not required by law.
If a partnership is registered, it becomes, for example, a OHG
(ordinary partnership). Partners do not need to provide a
minimum amount of equity by law but they can agree to pay
capital into the firm if they wish. Moreover, they are not only
(5) but also directors of the company.
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PRACTICE: agreement; cash; debts; on your own; owners;
personal; publicly; separate; shareholding
LIMITED COMPANIES

These business organisations must be registered with the commercial
register and have a (6) legal entity. This means the members are only liable
for the size of their (7) in the company. It is the company that is liable to
creditors with its assets. In the case of GmbH (company with limited liability)
the minimum equity is EUR 25,000. However, this company capital does not
consist entirely of (8) tangible assets e.g. machinery can also be
contributed. The company must also have a written agreement called the
articles of association.
An AG (public limited company) is often but not always a company whose
shares are traded (9) i.e. anyone is allowed to buy them. For these
companies the minimum equity is larger and there are different requirements
regarding the number of directors and accounting procedures.
A new mini-GmbH is planned. Its equity will be EUR 1 but the company
will have to make use of some of its (10) every year to build up equity of
EUR 25,000 to become a full GmbH.
The following are required to form a
company:
A memorandum of association. This document
sets out details of the companys existence and
contains basic information such as:
the companys name,
the objects of the company,
its address,
a statement of limited liability.

COMPANY FORMATION
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Articles of association. This is a more
substantive document which
governs the running of the company and
constitutes the contract between the company and its
members.
It deals with such matters as
the voting rights of shareholders,
the conduct of shareholders and directors meetings,
the powers of management,
the appointment of directors.
COMPANY FORMATION
documents must be sent to the Registrar of
Companies + the appropriate fee
the Registrar will then issue a certificate of
incorporation.

*The Registrar of Companies is a governmental body
based at Companies House in London, which has
responsibility for controlling the formation and
renewal of companies.
COMPANY FORMATION
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By law,
a PLC minimum two directors,
a LC one director.
They are appointed to carry out the day-to-day
management of the company.
They owe FIDUCIARY duties to the company and
a duty of care in negligence.

DIRECTORS
Their formal responsibilities include:
Presenting annually to members the accounts of the
company and the directors report.
Keeping a register of directors, a register of directors
shareholdings, and a register of shares.
Calling the AGM
Sending all relevant documents to the Registrar of
Companies.
Submitting a statement of affairs (which sets out the
companys financial position) if the company is wound up.
DIRECTORS
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A shareholder is an owner of shares in a limited
company. As such, they are a member of the company
and their name is entered in the register of
members. The powers of a shareholder are not easy
to define, but a majority shareholder may have
extensive powers of control that may remove or
threat to remove a director from office.
In formal legal terms, the relationship between the
member shareholders and the company is a
contractual one. It is based on the memorandum and
articles of association of the company.
SHAREHOLDERS
The rights of a shareholder of a company
include:
The right to a dividend.
The right to vote at meetings.
The right to apply to the court in certain
circumstances, e.g. where the companys affairs
have been conducted in a way unfairly prejudicial
to the members, or where the directors have
breached their fiduciary duty.
SHAREHOLDERS
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A share in a company constitutes a right that can be enforced by
legal action. Shares are issued with a par value (also called nominal
value).
The true value of shares will fluctuate according to the level of
success that the company is enjoying.
Shares are issued or allotted by directors to the extent of the
nominal capital of the company. The issuing of shares can only be
carried out in a way authorized in the articles of association of the
company or agreed at company general meetings.
A transfer of shares may be made by means of a sale or a gift. Once
the share sale is agreed, the vendor must execute a stock transfer
form and send it together with the SHARE CERTIFICATE to the
purchaser, who must pay the STAMP DUTY.
SHARES
FOCUS ON SKILLS:
MEETINGS
LECTUREs 5-6: TYPES OF MEETING; AGENDA;
MINUTES; LANGUAGE OF MEETINGS
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MEETINGS
Play an essential role in an organisation
A tool - to get decisions made
- to spread information
- to gather information
- to generate ideas
- to review or evaluate
- to solve problems
- to negotiate

Types of MEETING
Board meetings
Departmental meetings
Team meetings
Staff meetings
Weekly meetings
AGMs (Annual General Meetings)
EGMs (Extraordinary General Meetings)

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MEETINGS
An EFFECTIVE meeting has:
A clear purpose
A list of points to discuss
A result
A report of what took place at the meeting
WORD PARTNERSHIPS: MEETING
To arrange
To organise
To schedule
To call
To run
To chair
To have
To hold
To attend
To participate in
To take part in
To go to
To be present at
To postpone
To cancel
A MEETING
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KEY VOCABULARY: THE FORMAL
MEETING
AGENDA
A list of items to be discussed at a meeting.
MINUTES
An official record of the proceedings of a meeting.
CHAIR
the person who controls a meeting, also known as
CHAIRMAN/CHAIRWOMAN/CHAIRPERSON.
SECRETARY
The person responsible for the agenda and the minutes of a meeting.
PARTICIPANTS
The people who attend a meeting.
AOB (any other business)
An item on the agenda which gives participants an opportunity to raise
points that were not already included in the agenda.
VOTE
An expression of opinion/preferences about a question raised.

The types of meeting at which all members of
the company can attend include extraordinary
general meetings and annual general meetings.
The term board meeting refers to a private
meeting of the directors of the company.
Business at general meetings is transacted by
passing resolutions on the issues which need
to be decided.
MEETINGS AND RESOLUTIONS
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An ordinary resolution is the most commonly
used resolution. It requires a simple
majority of votes cast to be in favour to be
passed.
An extraordinary resolution and a special
resolution both require a three-quarters
majority. A special resolution is required in
many circumstances, including resolutions to
alter the articles or objects.
RESOLUTIONS
An agenda is prepared and circulated prior to the
meeting.
Participants have the opportunity to contribute to the
agenda.
Advance notice of meeting time and venue is provided
to those invited.
Meeting facilities are comfortable and adequate for
the number of participants.
The meeting begins on time and has a scheduled
ending time.
The use of time is monitored throughout the meeting.

CHECKLIST for EVALUATING A
MEETING
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Everyone has an opportunity to present his/her point of
view.
Participants listen carefully to each other.
There are periodic summaries as the meeting progresses.
No one tends to dominate the discussion.
Everyone has a voice in decisions made at the meeting.
The meeting typically ends with a summary of
accomplishments.
People will carry out any action agreed to during the
meeting.
Minutes of the meeting are provided to each participant
following the meeting.

CHECKLIST for EVALUATING A
MEETING
The chair / chairperson is the leader of the meeting
the person who controls the direction that it takes. He
or she is responsible for:
Introducing the agenda
Introducing the speakers, if appropriate
Running the meeting
Ensuring that rules are followed
Encouraging everybody to take part
Preventing digressions
Timekeeping
Achieving objectives of the meeting
Summing up at the end
Setting the date of the next meeting if necessary

THE ROLE OF THE CHAIR
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OPENING
STARTING THE
MEETING
Good , everyone. I think we
should make a start.
Right, shall we begin?
OK, can we start now please?
We have received apologies from
[names of people who cannot attend.]
INTRODUCING
PARTICIPANTS
Id like to introduce our partners
from Peru and Chile.
PURPOSE OF THE
MEETING
We are here to discuss
The purpose of this meeting is to

What we want to do today is

INTRODUCING THE
AGENDA
Does everybody have a copy of the
agenda?
You will see that there are points on
the agenda.
THE MINUTES OF THE
PREVIOUS MEETING
Can we take the minutes as read?
Proposed?
Seconded?
FIRST POINT
Now, Id like to move on to the first
point.
The first item on the agenda is
ASKING FOR
CONTRIBUTIONS
Who would like to start?
Id like to ask Mr Wheeler to tell us
Can we hear from Human Resources on
that please?

ESSENTIAL LANGUAGE OF MEETINGS
HANDING OVER TO
ANOTHER PERSON
Now, over to you James.
Mr Reid, would you like to take it
from here?
BRINGING OTHERS IN
James, how do you feel about what
Henrys said?
George, have you got any
comments on that?
Would you like to add anything,
Martha?
CONTROLLING THE
SPEAKERS
Sorry Rob, Ill have to stop you
here.
Mike, can you let Paula finish?
We are moving away from the point
here.
Can you be brief?

TIMEKEEPING
Right, that leaves us with about twenty
minutes to discuss
We need to move on now if we are
going to get through everything.
SUMMARIZING KEY POINTS
DURING THE MEETING
The main points we have looked at are

So the issues weve looked at so far
are

ESSENTIAL LANGUAGE OF MEETINGS
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DISCUSSION
ASKING FOR OPINIONS
What do you think, Rob?
Could we hear what Rowan has to
say?
Whats your view on this?
GIVING OPINIONS
I feel
I think
It seems to me that
It is clear that
In my view,
AGREEING
I agree. / I agree with John / with what
John said.
Thats right.
Absolutely.

DISAGREEING
I dont agree.
Im sorry, I cant agree with that.
Im afraid I completely disagree with you.
That cant be right.
INTERRUPTING
Excuse me, can I just say a word?
Sorry to interrupt, but
HANDLING INTERRUPTIONS
Could you just let me finish?
Ill come to that later.
Yes, go ahead please.
INDICATING THAT YOU ARE
ACTIVELY LISTENING
Yes, I see.
Right.
Mm, I understand.
REFERRING TO OTHER
SPEAKERS
As Patricia said,
Going back to what Connor was saying,


ESSENTIAL LANGUAGE OF MEETINGS
ENDING
SUMMING UP
Now, to summarize whats been
said,
So, weve agreed to
The decisions made here today are

SUMMARIZING FOLLOW-
UP ACTION
Paul will look into
Before the next meeting we need
to
Carol, can you follow up the ?
So, whos going to ?

CLOSING THE MEETING
Thats all for today.
Lets finish there.
Thank you for coming.
ARRANGING NEXT MEETING
The next meeting will be on (date,
time).
Ill be in touch about the date of the
next meeting.
What day would suit people for the
next meeting? Can you check your
diaries?

ESSENTIAL LANGUAGE OF MEETINGS
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It should be circulated in advance to the participants, offering them
the opportunity to contribute to it.
It should communicate the purpose of the meeting and the goal of
each item
It should include necessary, practical information
The language should be clear and concise.
RECOMMENDED ELEMENTS:
Items to be handled, listed in proper sequence
Meeting adjournment time
Time of scheduled breaks, if necessary
The leader of the meeting should have
an approximate time allocation for each item
Notes on points to be clarified
Equipment that may be required

AGENDA
1. title of the meeting / reason for the meeting
2. date, time, location
3. a list of those required to attend, usually in an alphabetical order (with
officers first)
4. apologies for absence (may be sent in advance / presented at the
meeting)
5. approval of the minutes of the last meeting
6. matters arising (from the minutes / last meeting)
7. correspondence received
8. reports from the officers
9. specific topics for discussion
10. AOB (any other business)
11. Next meeting
Adjournment (ESTIMATED END)
AGENDA - structure
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AGENDA
Minutes should be written as soon as possible
after the meeting, and circulated to the
participants and anyone else affected by the
content(usually within 24 hours).
The person assigned to take the minutes
notes down all the important points made at
the meeting and later writes up a clear
summary of what was said and decided.

MINUTES
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LAYOUT (standard format)
a. subject and date of the meeting
b. list of participants (apologies, if necessary)
c. summary of the chairs introduction
d. summary of opinions and suggestions exchanged
e. action points decided upon, people assigned to
each action and deadlines given
f. date and time of the next meeting

MINUTES
LANGUAGE STYLE
Quite formal
Short, clear, concise, readable sentences
Summarize only the most important points
Long speeches must be summarized and for the
main ideas use bullet points
Minutes shouldnt be longer than one page, no
matter how long the meeting was.

MINUTES
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GIVING THE LIST OF PARTICIPANTS
Use PRESENT: followed by the list.
SUMMARISING THE CHAIRS INTRODUCTION
Mr/Ms X opened the meeting with the following points: (+ bullet points)
SUMMARISING A DISCUSSION
Mr X was the first to speak / react/ contribute and put forward the following ideas:
Mr Y agreed / expressed approval and added:
Ms Z disagreed and argued:
Mr X expressed disapproval / concern and insisted
Ms Z accepted that but defended her position on . However, she conceded that

Mr X agreed / offered / promised / refused / wanted (+ to infinitive)
Mr Y denied / admitted / suggested / recommended (followed by the gerund)
Ms Z advised / asked / instructed / reminded (+ object + to + infinitive)
Everyone agreed on

MINUTES - Useful phrases
ACTION POINTS AND DEADLINES
The following action points were decided upon:
Mr X will look into / research / draw up a list of /
calculate / study by the end of next week.
Mr Y will speak to before the 15
th
.
Ms Z will come to the next meeting with
Mr X will get back to / send a report to the Finance
Committee within the next few days.

MINUTES - Useful phrases
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