1. 1. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Business English: Company Structures Darren Ingram January 2015 This is a slightly modified version of a given lecture with learning exercises removed.
2. 2. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Introduction
3. 3. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Ongoing Questions? Shout them out! Source: Wikipedia
4. 4. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram What Is A Company?
5. 5. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Company Probably of partly Anglo-Norman, Old French and Middle French origin, from as a fact or state of being with another or others (c. 1050), group of people or animals. Later expanded to include body of soldiers (military unit), group or collection of objects, friendship, sexual intercourse, social gathering of people and an organisational body for various trades, professions or guilds (c. 1370). Source: Oxford English Dictionary (retrieved January 2015)
6. 6. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram An organisational, regulatory, or representative body for any of various trades, professions, or institutions; spec. a medieval trade guild, or (in later use) a corporation which originated as one, such as one of the City Companies of London. Also with capital initial, esp. in the names of particular bodies. An association or corporate body formed to engage in trade or industry, typically having a legal identity distinct from that of its members; a commercial business, a firm. Also with capital initial in the names of particular companies. Abbrev.: Co. Source: Oxford English Dictionary (retrieved January 2015)
7. 7. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram After one or more personal names in the title of a firm, usu. (now always) in and Company: the partner or partners whose names are not included in the main part of the name or title. (within a company name) chiefly with capital initial, e.g. The East India Company or John Company (hist). Many other definitions and euphemisms for company in a non-corporate context. Source: Oxford English Dictionary (retrieved January 2015)
8. 8. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Alternatives? Just a few (dependent on context): body corporate, guild, organisation, firm, business, corporation, concern. Many variations on the theme: joint-stock company, share company, limited company, etc. Sometimes, the reason for the type of company structure used is responsible for its naming. Source: Oxford English Dictionary (retrieved January 2015)
9. 9. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Official Language Local usage of terms can vary, both officially and unofficially due to internationalisation English as a majority language (dark blue) English as a minority language (light blue) English possibly used/understood (the rest) Source: Wikipedia
10. 10. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Differences Can Exist Unless stated examples shown are based on British law and practice. Seek legal advice if you need it!
11. 11. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Legal Structures Sole Trader Limited company Partnership Unincorporated Association Slight differences can exist between English/Welsh & Scottish/Northern Irish company law/registration.
12. 12. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Sole Trader An individual who operates a business or trade No protection or limitation of liability: Individual responsibility for the company, its debts and its behaviour It is possible to employ staff All profits go to the shareholder (owner) after tax Low startup risk/barriers; privacy Low regulatory oversight (accounts) and management costs Higher risk profile
13. 13. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Possibly liable to Value Added Tax (VAT) Potentially less favourable taxation system Succession planning problems
14. 14. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Limited Companies Many differences between private limited company and public limited company Regulatory overhead larger for public limited companies Perception issues between the two types
15. 15. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Limited Company Minimum: one shareholder, share capital 1 The company is legally responsible for everything it does and not its shareholders (conditions apply) Shareholders (members) own part of the company Directors (who need not be members) are responsible for the company to both members and according to law
16. 16. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Directors Responsibilities: Try to make the company a success, using their skills, experience and judgment Follow the companys rules as detailed in its articles of association Make decisions for the benefit of the company, not themselves Tell shareholders if they benefit from a company transaction Keep company records and report changes to the authorities Make sure the accounts are a true and fair view of the business Ensure compliance with tax-reporting and regulatory requirements
17. 17. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Theres More! Even if other people or companies are hired to manage some of these things day-to-day (e.g. an accountant) the directors remain legally responsible for the companys records, accounts and performance.
18. 18. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Financials The company hopefully receives income through sales and declares a profit after expenses, costs and legal adjustments (e.g. depreciation) are accounted for The profit is taxable (corporation tax): others may also pay additional taxes (e.g. oil and gas) or windfall taxes Profit can then be distributed to shareholders as a dividend that is normally taxable or the profit can be retained for future use Shareholders can also be employed by the company and receive a salary with different tax treatment (also benefit in kind) Directors loans (capital inflow and outflow)
19. 19. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Regulatory Compliance Registered Office provision Maintenance of records such as shareholder register, results of shareholder votes and resolutions, loan, debenture, indemnity and mortgage register Submission of information/changes to Companies House/HMRC (formerly Inland Revenue) Some changes require shareholder approval of a resolution through an AGM/EGM and communicated
20. 20. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Accounts need to be maintained and prepared according to approved standards Returns made for VAT, excise duties, Eurostat, Companies House, regulatory bodies (as relevant) Records must be retained for at least six (non current) accounting years: often much longer Time differences can exist between accounting year and (UK) tax accounting year
21. 21. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram An auditor (audited accounts) no longer needed: unless required by shareholders or articles of association Turnover is less than 6.5m Assets held are less than 3.26m 50 or fewer employees on average
22. 22. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Daily Compliance A sign stating the official company name must be clearly visible at all locations including the registered office. All correspondence (including electronic) must show the registered company name, company number, registered office address and nature of the companys status, i.e. limited, public limited, etc. Image:CompanyWizardUK
23. 23. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Daily Compliance Director names are optional but it is list all or none Share capital can be optionally displayed but the amount of paid up (owned by shareholders) must then be shown
24. 24. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Private or Public? A public limited company (PLC) is a company whose shares can be freely sold and traded to the public (although a plc may also be privately held, often by another plc) The company does not have to be listed on a stock exchange Minimum share capital of 50,000 (12,500 paid up); two shareholders; two directors; one secretary (eligibility requirements exist)
25. 25. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Essentially, Ltd and Plc structures operate in similar practical regulatory environments Additional requirements do exist for Plc structures, primarily concerning how shareholders are treated Higher operational costs although these can be negligible (in the grand scheme of things)
26. 26. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Independent audit of accounts is mandatory Quarterly supervisory board meetings required Greater public profile Easier to sell shares / take inward investment
27. 27. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Privatisation Public limited companies became common knowledge to the average Briton during a long privatisation programme in the 1980s and 1990s, where state-owned assets were sold to regular citizens (and institutions) It introduced many changes to society - some good and some debatably less-so
28. 28. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Privatisation PrivatisationinBritainduring1980'sunderMrsThatcher,(C)BBC2007. https://www.youtube.com/watch?v=Z7Qq01tC0lU
29. 29. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Share Classes
30. 30. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Ordinary Shares Include a right to participate in a company through voting and an entitlement to receive dividends. Ordinary shares can carry different rights. Often these are differentiated by name, i.e. A shares, B shares, etc. Shares can have voting and non-voting rights. Common values/rights per share class. If a company is wound up the shareholders will be last to have the par value (shares face value) returned.
31. 31. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Bearer Shares An equity security that is wholly owned by whoever holds the physical share certificate. The issuing firm neither registers the owner of the stock, nor does it track transfer of ownership. The company pays dividends to bearer shares when a physical coupon is presented to the firm. Might be ruled out in some jurisdictions, i.e. UK (ongoing consultation as of January 2015).
32. 32. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Cumulative Preference Shares that allow the holder to be paid a dividend in a later year if there are insufficient funds to meet the dividend in an earlier year. This means the holder can probably ensure that dividends for all years are paid regardless of the ups and downs of the business.
33. 33. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Preference Shares Preference shares are not included in equity share capital as their rights are different to ordinary shareholders rights. Does not normally give the right to vote and will not take the control of the company away from the ordinary shareholders. They carry a right to a fixed dividend so the preference shareholder does not benefit if the companys profits increase. Entitled to their dividend before the ordinary share holders get theirs (more likely to be paid if the company is not doing well.) In addition, if the company is wound up, holders to get repaid the par value before the ordinary shareholders get their money back.
34. 34. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Redeemable Shares The terms of issue of redeemable preference shares give the issuer the right to redeem them. This type of share is near to having the qualities of a debt. Redeemable shares have the advantage that they can be bought back after a certain time (by the company). A form of debt financing.
35. 35. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Non-Voting Share Non-voting shares carry no rights to vote and usually no right to attend general meetings. Other classes of shares can be non-voting but convey other rights. Widely used to issue to employees or members of the main shareholders' families, so that some of their remuneration can be paid as dividends.
36. 36. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Share Classes The type and nature of share class issue, especially for the larger PLC can be quite complex. Many complex hybrid solutions can be made by canny legal advisers. With benefits and flexibility come increased marginal costs for maintenance and compliance.
37. 37. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Partnerships Historically a partnership was used for certain types of trade, e.g. solicitors, acting as a limited company without the protection of limited liability. Each partner was equal in the firm; each entitled to a share of the profit but jointly and severally liable for the firms debts. Commonly called ordinary business partnership.
38. 38. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Partnerships Limited companies are capable of being a partner. Recent legislative changes introduced limited partnerships and limited liability partnerships. Some controversy about perceived lack of scrutiny and potential for abuse by overseas investors.
39. 39. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Limited Partnerships A general partner can be personally liable for all the partnerships debts A limited partner is liable up to the value of their original investment A Limited Partnership must have at least one general and one limited partner Standard compliance (accounts, VAT, etc.)
40. 40. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Limited Liability Partnerships The partners in an LLP arent personally liable for debts the business cant pay - their liability is limited to the amount of money they invest in the business. Partners responsibilities and share of the profits are set out in an LLP agreement. Designated members have extra responsibilities. Minimum of two designated members. Companies can be ordinary members.
41. 41. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Limited Liability Partnerships Designated members must take responsibility for various accounting/regulatory compliance issues. Prosecution is the ultimate sanction for designated members who fail in their duty.
42. 42. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Unincorporated Association An unincorporated association is an organisation set up through an agreement between a group of people who come together for a reason other than to make a profit, e.g. a sports club. Registration is not necessary and there are no establishment costs nor routine reporting obligations generally. Individual members are personally responsible for any debts and contractual obligations. Basic financial records should be kept. If the association starts trading and makes a profit, it is tax-liable and must file a tax return in the same way as a limited company.
43. 43. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Company Types A company can also: a dormant company a trading company (in operation) a company in receivership or liquidation
44. 44. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Key Job Titles
45. 45. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Job Titles Most titles are flexibly-named and not defined or regulated by law (e.g. solicitor, doctor, architect). Historically there would have been a much tighter hierarchy and defined roles.
46. 46. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram C-Suite Highest-level operational management Can control thousands of staff (or just one) Not all titles may be present in a company/division Strange titles can sometimes replace more traditional titles, i.e. Director of Fun
47. 47. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram C-Suite Chief Executive Officer (CEO) Chief Operations Officer (COO) Chief Financial Officer (CFO) Chief Risk Officer (CRO) Chief Technology Officer (CTO) Chief Information Officer (CIO)
48. 48. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram C-Suite Chief Marketing Officer (CMO) Chief Creative Officer (CCO) Chief Administrative Officer (CAO) Chief Diversity Officer (CDO) CxO as a collective term Others: President, Executive Vice President, Senior Vice President, Vice President, General Manager, x-Director
49. 49. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram The Greasy Pole CEO/Chairman/Managing Director President/COO/Deputy or Vice MD CxO/EVP/x-Director VP/Senior Managers Managers Executives Board of Directors sits to the side; may include also operational management. ar weighting and vary between organisations and countries. Even in the U.S. state legislation can
50. 50. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Linguistic Differences
51. 51. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram British English versus.. Some business terms or definitions vary between English-speaking nations due to usage, custom and practice or legislative definition. Growing internationalisation often blurs the lines so many American English terms creep into British English usage.
52. 52. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Examples British American Annual General Meeting Annual Stockholders Meeting Articles of Association Bylaws Authorised Share Capital Authorized Capital Stock Company Corporation Into Administration Goes Bankrupt or Chap. 7 (liq)/Chap. 11 (reorg) Memorandum of Association Certificate of Incorporation Ordinary Share Common Stock Quoted Company Listed Company Shareholder Stockholder Turnover Revenue or Sales
53. 53. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Examples British American Sole Trader Sole Proprietor Partnership General Partnership/Limited Partnership/ (various per earlier slides) Partnership With Limited Liability/Joint Ventures Limited Company & Corporation Public Limited Company - Limited Liability Corporation (hybrid corp/part) - S Corporation (taxed on personal level) - Cooperative Unincorporated Association - Charity Not-for-profit organisation (wider definition, can include religious orders, libraries, etc). U.S. corporate structures and rules/treatment can vary between states. Gateway to information sba.gov - Legal advice may be necessary to determine needs.
54. 54. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Listening Test How many business-related terms can you pick up? ExtractfromMaryPoppins(C)1964WaltDisneyProductions https://www.youtube.com/watch?v=XxyB29bDbBA
55. 55. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Quite A Few Words Including: invest/invested, bank, compound, affluence, directors, safe, proprietary, prudently, thriftily, frugally, fidelity, fiduciary, account, credit, semiannually, financial, established credit, trust deeds, foreclosure, bonds, dividends, shares, bankruptcies, debit sales, private enterprise, mercantile, corporations, amalgamations
56. 56. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Business Jargon: taking a helicopter view
57. 57. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Not All Is Bad Some business jargon is just descriptive with a specific meaning to those inside the bubble. However a lot of it is of debatable value and use; with it being used to make something sound better than it is, often in the hands of people who dont really understand its true meaning.
58. 58. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Get a rapid 360-degree overview of contemporary business jargon MissionStatement/"WeirdAl"Yankovic,(C)2014 https://www.youtube.com/watch?v=GyV_UG60dD4
59. 59. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram AOB Another business shorthand term: Any Other Business
60. 60. 2015 Darren Ingram. All links are correct at the time of publication. No endorsement or specific recommendation is made unless clearly stated. DarrenIngram.com About.me/DarrenPIngram Questions? Disagreements? Darren Ingram darren@ingram.fi linkedin.com/in/DarrenPIngram about.me/DarrenPIngram