Four men, Mr Somov, Mr. Menshov, Mr. Antonenko, and Mr. Petrov   have started a limited company. They are shareholders. Mr. Somov invested 20,000 grivens. Mr. Menshov put in 10,000 grivens,  Mr. Petrov’s contribution was 55,000 grivens, the capital of Antonenko being 15,000 grivenes. The fixed capital (fixed assets) is 100,000 grivnes.

Mr. Petrov is the majority shareholder (he owns the most shares). Mr. Petrov has a controlling interest (he owns more than 50% of the shares). The company’s capital (the money for buying goods and equipment) is 100, 000 grivnes. The profit is divided between shareholders. The profit is divided by the invested shares, it’s called benefit ratio. The shareholders may control profit and loss, but another appointed person are responsible for it.

When a limited company has started trading, you do not invest in shares by giving more capital  to the company. You buy them from one of the Shareholders. If it is a private limited company, a shareholder can only sell shares if all the other shareholders agree. If it is a public limited company, shares can be bought and sold freely, usually at the Stock Exchange. If the company is doing well and paying high dividends, then you might  pay more then the face value of the shares. If it is doing badly, you might pay less than the face value of the shares. The price you pay at the Stock Exchange or to a  shareholder for your shares is their market value. If the company fails, it will stop trading and go into liquidation. This means that all the company’s property and equipment (its assets) must be sold and the money from the sale will be used to pay its debts to its creditors. The shareholders may lose the money they paid for the shares. If the company still does not have enough money to pay all its debts, the shareholders, do not have to pay any more money. In other words, the shareholders’ liability for debts is limited  to the value of  their shares. On the other hand, if you are an owner  of a business which is not limited, for example a sole proprietorship (owned by one person) or a partnership  (owned by between 2 and 20 people) and your business fails, you will go bankrupt. In this case you might have to sell your own private possessions (your house, car, furniture, etc) to pay all your creditors. Other words, sole proprietors and partners have unlimited liability for their firm’s debts.       

Exercise 1. Give for the English:

вкладати капітал, уставний капітал,  акції, приватна компанія з обмеженою відповідальністю, партнерство, фондова біржа, розподіл прибутків, ліквідуватись, виплачувати борги, відповідальність.