PRIVATE COMPANY: The structure of the authorized capital. Risk of a takeover.

A private company can be formed by two or more people. In a private company there cannot be more than 50 members, or shareholders. Each share carries a vote at the shareholders’ meeting.

The authorised capital consists of market value of all the shares issued.

If any person owns 51 per cent of the shares he would have a controlling interest, & would be in a good position to take over the firm.

H& G is a private company. The balance of power was upset after Ambrose Harper’s death. Wentworths, a large & successful firm, owning 10 per cent of H& G shares, had an opportunity of buying some of the shares belonging to Harper. If Wentworths owned 51 per cent of the shares they would be in a good position to take over H& G, making it a fully owned subsidiary.

12. Auditing the Accounts
Every year the accounts of a limited company must be approved by auditors, acting on behalf of the shareholders. Their duty is to check reports about the state affairs (дела) of the company.

The Profit Statement (Trading & Profit & Loss Account) shows how the profit for the year is arrived at.

The Balance Sheet is a summarized statement, showing the amounts of funds employed in the business (usually consist of the issued share capital, reserves & retained earnings)

 

The work in the Accounts Department. Debtors.

Collecting bad debts is one of the most difficult affairs in the work of the Accounts Department. Retail business is usually done on a cash basis, & wholesale business is done on credit, given for 30 days. Any company prefer to receive long credit from its suppliers.

For each sale an invoice is sent to the customer. At the end of the month each customer is sent an account, showing the total amount due.

Sometimes debtors cannot repay a credit, for example, in case of bankrupt of the company or dishonesty the people, running it.

Accounts not paid in time are called overdue accounts. In very difficult cases a firm employs a professional debt collector. There are special agencies, which provide information about the financial situation of any company

Insurance in International trade. Hedging

Nowadays insuring against loss, damage to one’s property, it is very popular and even modern. When a comp wants to ensure smth., it takes out an insurance policy, that insures the goods or property against almost anything that can happen. But most insurance companies put in some exceptions, called Act of God.

Hedge
Hedging occurs almost everywhere, we face up to it every day. For instance, people hedge themselves when they buy travel insurance before trip. In financial markets hedging is a more complicated process.

 

Types of securities.

Nowadays there are 5 main types of Securities market: Stock Market, Foreign Exchange Market, Government Securities Market, Derivatives Market, Futures Market. The main different between them is the type of financial instrument used.

There are 6 main financial instruments which people use most of all. It`s stocks, bonds, options and futures.

1) stock is a represent part of ownership of the company.

There are 2 types: common stock and preferred stock. Preferred stock they have dividend before the ownership of the common stock.    

Stockholders have one vote for each share of stock they own.         

2) A bond is a formal contract to repay borrowed money with interest at fixed intervals.
There are 2 types: state bond and corporate bond. State bond is more security, than corporate bond.

Corporate bond sometimes gives more interesting, than state bond.

Corporations can raise money by selling bonds, as as stocks. A bond is certificate that promises to pay the holder of a bond, the investor, a certain amount of money on a certain date.

   3) The 3`d one is option.

Option call and sell option

4) futures contract to buy or sell company assets or commodities at future date, but then the price fixed at the time.

5) subscription right
6) warrant

16. Mergers, takeovers & acquisitions.

The phrase mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.

In business, a takeover is the purchase of one company (the target) by another (the acquirer, or bidder).

Types of takeover

Friendly takeovers Before a bidder makes an offer for another company, it usually first informs the company's board of directors.

Hostile takeovers A takeover is considered " hostile" if the target company's board rejects the offer, but the bidder continues to pursue it, or the bidder makes the offer without informing the target company's board beforehand.

Merger

A merger occurs when one firm assumes all the assets and all the liabilities of another.

Pros of takeover: Increase in sales/revenues: Increase market share; Decrease competition (from the perspective of the acquiring company); Reduction of overcapacity in the industry; Increased efficiency as a result of corporate synergies/redundancies

Contras of takeover

Reduced competition and choice for consumers in oligopoly markets. Likelihood of job cuts.

Cultural integration/conflict with new management

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