VII. Reading

Exercise 15. Read and translate the text C:

Text C

Corporation (or Company)

A corporation (or company) is the most expensive way to organize a business. Corporations issue stock in shares, which are certificates of owning part of the corporation's capital. Shares certify that a definite sum of money has been invested by a stockholder (or shareholder), who may own one or many shares, and that he or she has the right to definite annual dividends. Stockholders also have the right to attend the stockholders' meetings, which are nominally the supreme governing body of a corporation. Corporations, or companies, may be public, with an unlimited number of stockholders, and with stocks being traded freely at the stock exchange by brokers. The stock exchange is a place where stocks are bought and sold. A corporation can also be owned privately (private company). In that case, it has a limited number of stockholders, and shares are not sold by brokers at the stock exchange; only stockholders themselves can sell them.

Setting up a corporation is a long and difficult process, beginning with issuing stock and organizing a subscription. Legal registration must be completed, by which the company receives authorization to open up business as a corporation. Corporations, however, can raise the greatest amount of investment capital because an unlimited number of shares can be sold. Stockholders own the corporation, but they do not necessarily work in it (though some of them certainly may). They do not even need to run the corporation. It is run by directors or managers (executives) who often are not stockholders themselves, but are employed by the corporation. Those stockholders who hold more shares have more votes at the annual stockholders' meeting and can have a greater influence on decisions taken.

Corporations have great advantages that make them the strongest and most powerful form of business, ensuring the greatest profits.

These advantages are:

• their ease of attracting investments, and the opportunity of making them practically unlimited;

• the limitation of every stockholder's responsibility, as he or she is only responsible for the amount of her or his investment;

• continuity, because a corporation does not die with the death of a founder or partner, and ownership rights can be easily passed on to other people;

• the opportunity of delegating rights and authority;

• the opportunity of using the talents, knowledge, and experience of an unlimited number of people;

• the opportunity of organizing a network of associated corporations which share functions among them;

• the financial power to research, develop, and produce new goods.

But there are also great disadvantages to a corporation:

• It is difficult and expensive to start.

• It is difficult to control, and hiding parts of profits from stockholders is a frequent occur­rence.

• The management usually takes great care of the principal stockholders' interests, while the rights of those who have a small number of shares are often neglected.

• It is more strictly regulated legally than a sole proprietorship or partnership is.

• It has much less freedom of operation than a sole proprietorship or partnership does.

• It has to pay corporate tax, besides income tax (double taxation).