Why are companies referred to as

UNDERSTANDING THE TEXT

Exercise 1. Check the transcription in a dictionary, read and translate the words listed below.

WORD-STUDY

Unit XV

63 – 64

Nouns

liability, skyscraper, assets, bankrupt, enterprise, key, guarantee, equity, fund, firm, identity.

Adjectives

initial, anonymous, public, private.

Verbs

own, require, pursue.

Adverbs

enough, though, almost.

Exercise 2. Read and translate the following pairs of words. Note how the meaning of the words changes:

Model: a) due to the suffix -ship: relation – relationship – взаимоотношения

(между);

friend-friendship

member-membership

partner-partnership

comrade-comradeship

owner-ownership

Model: a) due to the suffix -hood: man – manhood- мужественность;

child-childhood

brother-brotherhood

mother-motherhood

LTD., INC., GMBH, OR S.A.?

The heart of capitalism is private ownership, and a limited liability company allows people to own almost anything – from skyscrapers to television stations without risking their professional assets should the company go bankrupt.

An individual, like Henry Ford, might want to begin a small enterprise and personally retain total responsibility and liability, but once it starts to grow, a partnership or a "company"—such as Ford Motor Company—would need to be formed. The key factor in owning any company is the guarantee called limited liability: the owners of a company never have to pay more than they have invested in the company. Their liabilities are limited. When a company goes bankrupt, the owners can never be required to pay its unpaid bills.

The worst that can happen to investors in a limited liability company is losing their initial investment if the company fails. By limiting the downside risk for shareholders, companies arc able to attract equity investors and raise large amounts of funds called equity capital through sales of shares rather than by borrowing money at potentially high interest rates.

The names of companies around the world reflect this guarantee or limited liability. The abbreviations "GmbH" in Germany, "Inc " in the United States, or" Ltd." in most other English-speaking countries indicate that the firm is a limited liability company and investors have nothing more to lose than the money invested in their shares. The "S.A." in French- and Spanish-speaking countries also refers to limited liability by defining shareholders as "anonymous." Since the identity of shareholders can be kept secret, the creditors or a bankrupt company have no right to pursue them for the company's unpaid debts.

Many countries make a clear distinction between public and private companies, with separate designations, such as AC and GmbH in Germany, or Plc and Ltd. in Britain. Generally, "public" companies are those large enough to have their shares traded on stock exchange, while smaller unquoted companies are said to be "private," even though their shares can be held by the public at large. In some countries, a large company is said to be privately owned if its shares are not available to the general public, in the United States, where little distinction is made between public and private companies. Most companies simply bear the title "Incorporated."

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