Text 18

TEXT 1

Financial management decisions traditionally have been divided into three categories: investment decisions, financing decisions and dividend decisions.

Investment decisions involve deciding which assets to buy and sell and what the company should do for a living. Past investment decisions are reflected in the level and composition of assets on the firm's balance sheet.

Financing decisions are concerned with how to obtain the funds to acquire and finance the firm's assets. Past financing decisions of the firm are reflected in the current and long-term liabilities and owners' equity or net worth balance sheet accounts.

The dividend decision involves deciding what percentage of earnings should be distributed to the owners of the company. The earnings that are not distributed as dividends are retained and reinvested in the company.

Agency and corporate governance problems are concerned with the conflicts of interest, which arise among the various shareholders of the firm, and with the rules for governing the corporation - rules, which determine who has effective control of the company and therefore can determine what the company does and how the wealth of the company is shared among the various stakeholders. The stakeholders of the firm include the owners, creditors, (people who have lent money to the company), managers, employees, customers, suppliers and public officials.

Net income is different from cash flow. Net income is calculated on an accrual basis" according to Generally Accepted Accounting principles. Net income differs from cash flow because of non-cash expenses such as depreciation, and capital flows, which do not appear on the income statement.

To maximize owner wealth, managers should focus on cash flows because it is cash that is used to pay dividends and to invest in new projects. However, managers must do more than generate positive cash flows; they must also earn a return on the owners' capital which is at least as good as the owner can earn elsewhere on comparably risky investments.

The easiest, and perhaps the most painful, way for managers to determine whether their employers, the shareholders, approve of their decisions and what the market thinks about the firm's future is to monitor the company's stock price, especially on the day major new initiatives are announced. An increase in the stock price means good news, a decrease bad news.

Investment decisions – инвестиционные решения

Financing decisions – решения о финансировании

Dividend decisions – решения о дивидендах

Are reflected in the level and composition – отражены в уровне и структуре в балансовом отчете

Are concerned how to obtain the funds to acquire and finance the firms assets–связаны с тем как получить средства для приобретения и финансирования активов фирмы

Owners equity – собственный капитал

Net worth balance sheet accounts - чистой стоимости балансовых счетов

To distribute – распространять

to retain – сохранять

corporate governance – корпоративное управление

public officials, customers – гос.должностные лица, клиенты

cash flow – денежный поток

generally accepted accounting principles – общепринятыми принципами бухгалтерского учета

non-cash expenses- не денежные расходы

depreciation – амортизация износ обесценение

capital flows which don’t appear on the income statement - потоки капитала, которые не отображаются в отчете о доходах

owners’ capital-уставный капитал

approve – одобрять

company's stock price – курс акций компании

major new initiatives are announced – Крупные новые инициативы объявлены

TEXT 2

An invoice is a document, which gives details of the quantity, the description, the value per unit, and the total value of goods which are despatched from a seller to f buyer In addition, discounts are often included. (In home, or domestic trade the Value Added Tax must also be included, and invoices now have a V.A.T. registration number),

The invoice is a printed form with the seller's name and address, telephone, telegraph and telex number. The seller writes the name and address of the buyer on the invoice

An invoice sent to a buyer is a bill which tells the buyer the exact amount he must pay It can also be from of advice note. It may give details of the cost for information only, or it may be a statement of costs, which must be paid before the goods are delivered. A Pro Forma Invoice is like this. It is like an invoice in every way, but it is used;

1, When the seller demands payment before he despatches the goods. This may happen with new customers whose credit status is unknown.

2, For information, A Pro Forma Invoice may be a quotation, informing a buyer how much the goods cost, including the cost of freight and insurance if necessary.

3, When goods are sent on approval. That is, when the seller sends samples of goods to the buyer who can then inspect them before he decides to buy.

When an order is received from a buyer the Sales Department passes copies to other departments such as accounts, packing and despatch. If the goods are not in stock, a copy of the order is sent to the factory for manufacture.

The order is transferred to a printed form and copies of this form are sent to various departments. The Sales, Accounts and Despatch Departments must have copies The buyer's name and address, the number of goods ordered, and the order number are typed on this form. Columns are left blank for the price of each good, and the total. One of these copies is retained by the Accounts Department, which completes the remaining columns. This copy is known as the invoice.

The invoice is normally a bill which must be paid. However, a buyer may have an open account with a seller, especially if they have a regular trade. In this case the seller keeps a record of all the invoices and sends a statement to the buyer. This statement may be sent once a month or quarterly (once every three months, a quarter of a year). The separate invoices become the debit entries, and payments by the buyer become the credit entries. The balance is the amount which must still be paid by the buyer, and it appears in the final column.

an invoice- счет-фактура

are despatched – отправлены

discount – скидка

value added tax – налог на добавленную стоимость

telex number – номер телекса

advice note – извещение

proforma invoice – предварительная счет-фактура

goods sent on approval- на пробу

accounts department – бухгалтерия

columns are left blank for price – столбцы остаются пустыми для цены

the separate invoices become the debit entries отдельные счета становятся дебетовыми записями

TEXT 3

The Bill of Lading is an essential document in international trade and shipment. It is important in law, in finance, and in insurance. It is important in law because it is the legal title to ownership of the goods. If an importer holds the Bill of Lading he can take possession of the goods printed on it. The consignee (the buyer or importer) can get his goods only when he presents the Bill of Lading to the shipping company when the ship arrives.

It is important in finance because the Bill of Lading is usually handed to the bank together with the Export Invoice and the Certificate of insurance, before the bank will issue credit or accept a Bill of Exchange. The consignor (the seller or exporter) sometimes demands payment before he hands the Bill of Lading to the buyer or his bank.

It is important in insurance because the Bill of Lading states whether the Captain of the ship has inspected the goods on board ship. This is important in deciding who is responsible or liable for any damage to the cargo.

The Bill of Lading is a receipt signed by the captain of the ship for the cargo he has received onboard, this is called a " shipped" Bill of Lading (also called a " shipped on board" Bill of Lading). This Bill of Lading states that the captain has inspected the goods after loading, and gives the following details:

· The name of the shipper = The quantity

· The name of the ship = The type of packing

· The consignee (or " to order") = The description of the goods

· The port of loading = The weight

· The port of discharge = The measurement = The marks and numbers

Banks usually require " shipped" Bills of Lading for credit transactions. A " clean" Bill of Lading means that the ship owners agree that the goods were received on board in good condition. If the goods are not in good order and condition, the Bills of Lading are described as " dirty", " unclean", or " foul".

Some Bills of Lading are also called " claused", because the ship owners sometimes add an extra clause to show that the goods were, for example, badly or inadequately packed. This may be important for the insurance surveyor.

A Bill of Lading is a negotiable document. An importer can endorse the Bill of Lading and sell the goods in this way, even before they arrive. An importer can endorse a Bill of Lading by signing across the back. In this way, owner-ship of the goods can be transferred to another buyer simply by handing the endorsed Bill of lading to him. A Bill of Lading can state that the goods must be delivered to a certain person or company, or it may be state " to order". (This phrase is also printed on cheques and Bills of Exchange.) A letter of Credit may demand that the Bill of Lading should be made out " to order" and endorsed " in blank". This means that the sellers place no restrictions on the right to transfer ownership.

Bill of lading – транспортная накладная, коносамент

Essential document – неотъемлемый документ

a legal title for ownership – правовой титул на собственность

to take possession – распоряжаться

the consignee - грузополучатель

the consigner/consignor- грузополучатель/отправитель

accept bill of exchange – принять вексель

receipt – квитанция

shipped bill of lading – бортовой коносамент

the measurement –измерения

clause – пункт

insurance surveyor – страховой инспектор

negotiable document – оборотный документ

signing a cross the back – подписать на оборотной стороне документа

it maybe state " to order" - это может быть государство, " чтобы заказать"

a letter of credit may demand that the bill of lading should be made out " to order" and endorsed " to blank" – аккредитив может потребовать, чтобы накладная была разобрана, чтобы заказать и подтверждена к бланку

TEXT 4

Banks make their profits by lending the money which customers deposit with them to others who need it for personal or business reasons. Most people need more money than they have currently available at some time in their lives.

To be a borrower you must be a customer of the bank because the money will be lent to you through a bank account. There are two ways in which you may borrow. The first, and easy, is to spend more money than you have in your current account - to overdraw. The second, and the normal way of borrowing larger amounts or for a long period of time is the loan.

If a manager permits an overdraft on current account he is likely to set a limit to the size of the overdraft and may stipulate a date by which the account is black in credit. Businesses whose payments and receipts are often irregular will frequently need to use overdraft facilities and they are often granted to private customers as well particularly when the manager knows that regular payments are made directly into the account.

If a loan is granted it will be a fixed sum immediately available for a fixed period of time. For personal loans it is common to arrange that the loan and the interest are repaid in equal regular installments over the period of the loan. A separate account is opened to record the repayment as they are made.

There are a number of things that the manager will want to know before he is prepared to grant your request. The obvious facts will be the amount that you seek and the arrangements for repayment that you are able to suggest. You need to tell him something about the purpose of the loan, a business loan is likely to help you make profits out of which the loan can be repaid with interest and he will wish to judge for himself whether or nor this is likely. Personal loans usually have to be repaid out of an income which will not get any bigger and the manager will be particularly anxious to ensure that you are not being too optimistic. In deciding this he will be considerably assisted by his knowledge of you and his estimate of your character.

The manager will be wise enough to try and ensure that you will have sufficient amount of money to do what you want to do. Finally he will consider whether or not you will be able to repay and what kind of security you can offer against the possibility that you do not repay. In the case of a business the manager may well want to see well prepared, relevant documents such as profit and loss accounts and balance sheets for the most recent years. He would also ask about the expected return from the use of the money and want to see some figures upon which you have based your calculations. For a business good security might be one or more of the assets of the business whilst personal loans are often secured by such things as life insurance policies on which the bank is making regular payment for you or the deeds of your house.

To deposit – вносить

To overdraw – превысить кредит

To permit- разрешать

to stipulate – оговорить

frequently – часто

overdraft facilities – предоставление овердрафта

to grant – предоставлять

as well particularly – а особенно

to arrange – организовать

for personal loans it is common to arrange that the loan and the interest are repaid in equal regular installments over the period of the loan – для личных займов распространено договоренность, чтоссуда и процентывозмещаются в равныхрегулярныхвзносахзапериодссуды

repayments – выплаты

the obvious fact will be the amount that you seek and the arrangements for repayment that you are able to suggest – очевидный факт будет сумма, которую вы хотите и механизмы для погашения, что вы в состоянии предложить

considerably – значительно

to assist – помочь

estimate – оценка

sufficient – достаточно

whilst personal loans are often secured by such things as life insurance policies on which the bank is making regular payment for you or the deeds of your house – в то время как потребительские кредиты, часто защищены с помощью таких вещей, как полисы страхования жизни, на которые банк вносит регулярные платежи за вас или запись вашего дома

TEXT 5

The activities of all companies are subject to national and international laws, which lay down the conditions under which they can operate in their home markets and abroad. Companies and individuals use the services of a law firm or of a corporate legal department to take legal action or to litigate in order to obtain compensation for harm they have suffered. Both sides in a lawsuit are represented by their lawyers (US attorneys); the plaintiff" or litigant brings the lawsuit against the defendant. Businesses can be sued if they fail to respect their obligation under the law. Most lawsuits are settled out of court through negotiation between the two parties.

Of the many ways in which companies can end up owing vast sums of money in litigation" six currently stand out. Product-liability cases are the single most common area, followed (in no particular order) by suits concerning antitrust, intellectual property, employee conduct, contractual failure and, increasingly, shareholder actions. There is nothing new about the categories themselves; what has changed is that each has become, in essence, a huge industry in itself, which has been fed by ever larger settlements.

Along with creditors and shareholders, a third group is developing significant ownership claims on American companies: litigants.

Because litigation risk is difficult to analyze, when the financial markets do wake up to these concerns, they often panic. As a result, the indirect costs from higher financing charges can become as important as any potential verdict or settlement. Often, litigation is not the trigger for a company's share decline, but rather the result. This is because any company whose share price falls sharply is exposed to legal action. Law firms say these suits prompt much needed change. But it is questionable whether they make economic sense, as they typically end up taking money from firms (i.e. shareholders) and returning it to them minus lawyers' fees - which can be one-third of the settlement.

On the face of it, why shouldn't a company that does something wrong pay the price? The sense of justice, after all, is why Americans love the novels of John Grisham and movies such as Erin Brockovich with Julia Roberts. The trouble is, there is no incentive for a plaintiff lawyer, or a jury, to weigh up the broader economic consequences of huge awards against companies, especially multi- million dollar punitive damages'"

Activities – деятельность

are subject to national and international laws – которые подлежат национальным и интернациональным законам

lay down – формулировать

services of a law firm - услуги юридической фирмы

corporate legal department – корпоративный юридический отдел

to litigate – судиться, lawsuit – иск

litigant - сторона

plaintiff – истец, defendant – ответчик

to be esued – отвечать по иску

obligation – обязательства

most lawsuits are settled out through negotiation between the two parties - большинство исков регулируются путем переговоров между двумя сторонами

six currently standout – в настоящее время выделяется шесть

product-liability cases are the single most common area -???

antitrust – антимонополия

employee conduct – поведение сотрудников

in essence – в сущности

fed up by ever larger settlements –???

significant ownership claims – значительные претензии собственности

litigation risk(litigation – судебный процесс, тяжба) – судебный риск

to these concerns – на эти проблемы

indirect costs – косвенные расходы

litigation is not the trigger for a company's share decline - тяжба не импульс для снижения акций компании, а скорее результат

is exposed to legal actions –подвергалась судебным искам

prompt – подсказать

economic sense – экономический смысл

minus lawyers' fees – минус сборы адвокатов

incentive – стимул

broader – широком

TEXT 6

While a natural person is born, artificial persons must be formed procedurally, A company is formed by following a procedure which is set out in the Companies Acts, The procedure requires filing of documents and a fee with | registrar of companies. There are three registrars in the UK - with registries in Cardiff, in Edinburgh and in Belfast. There are also branches of these main registries - for example, there is a branch of the Cardiff registry in London, at which documents may be filed, and searches made. For convenience the general term 'Companies House' has been used in this book wherever reference is made to any of the registries,

It is only when the registrar with whom documents are filed issues i certificate of incorporation that the company is in existence. Anyone who makes an agreement on behalf of a company before it is in existence will be personally liable on that agreement, even after the company comes into existence. Such agreements are called 'pre-formation' or 'pre-incorporation' contracts. Legal advice should always be taken before making a pre-incorporation contract, Pre- incorporation contracts need not be in writing, so absence of a document does not necessarily mean there is no pre-incorporation contract.

When the certificate of incorporation is issued, the company is said to have been created, registered, formed or incorporated. The certificate will state name, date of incorporation and a unique company number. Whilst the name may be changed, the number will stay constant until the company is dissolved, There are no rules as to where the certificate should be kept. Many companies like to display the certificate at the registered office, or a place of business, but this is not a legal requirement. If it is not displayed, it is good practice to keep it with the company's registers, at the registered office.

If the certificate is lost, the registrar will issue a duplicate, upon payment of a fee. The duplicate may be used for all the same purposes as the original.

Ordinarily, the only time when the company will need to produce its certificate is to open a bank account, to deal with overseas authorities or lawyers, or to apply for tax clearance on certain complicated transactions.

Private companies may carry on business immediately upon issue of a certificate of incorporation. A public company must obtain a trading certificate.

Upon issue of the certificate of incorporation of a company, a person who has consented to act as a director by signing the official form lodged upon the application for incorporation is automatically constituted a director of the company - no appointment or confirmation of his appointment is required. A person named ae the first director in the articles will not be a first director unless he has completed the appropriate official form and signed his consent to act

To set out — изложено

filing of documents — подачи документов

a fee with a registrar of companies — плата с регистром компаний

branches — отрасли

registry — реестр

may be filed — могут быть поданы

searches made - поисковые запросы

for convenience — для удобства

reference — справка, ссылка, рекомендация

issue — выпуск, публикация

certificate — свидетельство

behalf — имени

in existence — существующий

pre-formation — предварительное формирование

pre-incorporation contracts — предварительное включение контрактов

so absence of a document does not necessarily mean there is no pre-incorporation contract - поэтому отсутствие документов вовсе не означает, нет предварительного включения контракта

the company is said to have been created, registered, formed or incorporated - Компания, как говорят, была создана, зарегистрирована, образована или включены

whilst — в то время как

to dissolve — распускать

requirement — требование

purpose — Цель

to deal with overseas authorities or lawyers - иметь дело с зарубежными властями или юристами

or to apply for tax clearance on certain complicated transactions - или подать заявку на оформление налога на определенные сложные сделки

upon issue of a certificate of incorporation - При выдаче свидетельства о регистрации

consent — согласие

to lodge — приютить, квартировать, класть (в банк)

TEXT 7

One of the primary considerations when going into business is money Without sufficient funds a company cannot begin operations. The money needed to start and continue operating a business is known as capital. A new business needs capital not only for ongoing expenses but for purchasing necessary assets These assets - inventories, equipment, buildings, and property - represents an investment of capital in the new business.

How this new company obtains and uses money will, in large meauife, determines its success. The process of managing this acquired capital & known as financial management. In general, finance is securing and utilising capital to start up, operate, and expand a company.

To start up or begin business, a company needs funds to purchase essential assets, support research and development, and buy materials for production. Capital is also needed for salaries, credit extension to customers, advertising, insurance, and many other day-to-day operations. In addition, financing is essential for growth and expansion of a company. Because of competition in the market, capital needs to be invested in developing new product lines and production techniques and in acquiring assets for future expansion.

In financing business operations and expansion, a business uses both short- term and long-term capital. A company, much like an individual, utilises short-term capital to pay for items that last a relatively short period of time. An individual uses credit cards or charge accounts for items such as clothing or food, while a company seeks short-term financing for salaries and office expanses. On the other hand, an individual uses long-term capital such as a bank loan to pay for a home or car - goods that will last a long time. Similarly, a company seeks long- term financing to pay for new assets that are expected to last many years.

When a company obtains capital from external sources, the financing can be either on short-term or a long-term arrangement. Generally, short-term financing must be repaid in less than one year, while long-term financing can be repaid over a longer period of time.

Finance involves the securing of funds for all phases of business operations. In obtaining and using this capital, the decisions made by managers affect the overall success of a company.

without sufficient funds - не имея достаточных средств

primary considerations — основные факторы

not only for ongoing expenses but for purchasing necessary assets

не только для текущих расходов, но для приобретения необходимых активов

inventories — инвентаризация

property — имущество, собственность

to obtain — приобретать

in large measure — в большой мере

the process of managing this acquired capital - Процесс управления этим накопленным капиталом

utilising capital - использования капитала

expand a company -расширение компании

to purchase essential assets — приобретать необходимые активы

to support — поддерживать

capital is also needed for salaries, credit extension to customers, advertising, insurance, and many other day-to-day operations — капитал также нуждается для заработной платы, кредитных расширений клиентов, рекламы, страхования, и многих других изо дня в день операций

expansion — расширение

production techniques - технологии производства

in acquiring assets for future expansion - в приобретении активов для будущего расширения

in financing business operations and expansion, a business uses both short term and long term capital - в финансировании хозяйственной деятельности и расширения бизнеса использует как краткосрочный и долгосрочный капитал

to charge accounts — оплачивать счета

to seek — стремиться

loan - заем

to expect — ожидать

external — внешние

finance involves the securing of funds for all phases of business operations - финансирования включает в себя обеспечение средств на всех этапах бизнес-операций

TEXT8

The companies limited by shares, i.e. companies in which the liability of each member is limited to the face value of his shares, may be of two types - (a) the private limited company, (b) the public limited company,

A private company consists of from two to fifty members (not counting those working in it). A private company is not allowed to appeal to the public to take up shares. Private companies are often family affairs and the capital is raised and the shares are held among the members of the family. The right to transfer these shares is restricted; they can be transferred only with the consent of the directors of the company. Obviously, this is a grave disadvantage for the shareholder in a private company. As every share carries one vote he must hold at least 51 per cent of the shares in order to have the majority required for the transfer of shares. If he holds less he must clearly understand the risk which is implied in this restriction; if at any time he wants to dispose of his holding he may find to his unpleasant surprise that he is entirely dependent on the majority of shareholders. This is in contrast to the public limited companies, whose shares can be freely transferred on the Stock Exchange or by private negotiation.

Public limited companies, though not so numerous as private companies, have far more capital invested in them. They must have at least seven members, but the shares of big companies are often held by many thousands, whilst, a private company is limited to fifty. The principle of limited liability applies, of course, equally to both types. The shareholder in a public company is not restricted in the transfer of his shares; all he has to do is to ring up his broker and instruct him to sell his shares; the sale is usually affected within a day or two on ihe Stock Exchange. This is a great advantage as compared with the restrictions on a member of a private company.

A public company raises its capital by inviting the public to take up shares; it issues a prospectus, a copy of which has to be sent to the Registrar of Joint Stock Companies. This prospectus will state the objects of the company, the amount of capital to be raised and the terms on which shares will be issued, a description of the property, an estimate of the profits expected to be made and, with a company that is already in existence and is being converted into a public company, the valuation of the assets taken over and a statement of the profits made during the last five years.

A " take-over" bid is an attempt to acquire control of a public limited com­pany by purchasing, or offering to purchase, the whole or part of the ordinary shares, at a price which is usually well in excess of their quoted price

The practice has been under attack in the press, and some bids have been nothing more than attempts to make a great deal of money at the expense of the shareholders. But, usually, this is only possible when the company's assets have been undervalued by the directors who have allowed them to be shown in the balance sheet at a figure that is far below their true value,

TEXT9

Upon issue of the certificate of incorporation of a company, a i person who has consented to act as a director by signing the official form lodged upon it he application for incorporation is automatically constituted a director of the company - no appointment or confirmation of his appointment is required. A person named as the first director in the articles will not be a (first director unless he £ Ш@ completed the appropriate official form and signed his Gonsentito act.

Subject to the disqualifications and restrictions in the Companies Adts as'to who may be a director, the method of appointment of subsequent directors 111Ш down in the company's articles. The ultimate control asitoithe composition dfithe board of directors rests with the shareholders \who can always appoint, and = more importantly sometimes - dismiss a director. The shareholders can dlsoifw the minimum and maximum number of directorsjHowever.itheiboard caniusiitllty appoint (but not dismiss) a director to his office as\well.

Before appointing a director, both the shareholders and ithe iboard Should check a number of procedural matters, in addition to assessing ithe.competence of the prospective director.

The articles should be checked for any nationality or other (restriction -on directors. The permitted maximum number of directors should also ibe clhadked although there may be no maximum number. Ifthereis.iihwillihavelbeenifixediby the shareholders. If the maximum number needs increasing ibefore a mew director may be appointed, the directors will need to ask the shareholdersitoiinarease it

Sometimes directors are required by the articles (to also ihold shares, IThisiia called a 'share qualification'. The articles will specify ithe inumber Of shares required to be held. If a share qualification is required, (the director rnnust acquire sufficient shares within two months of his appointment or such.earlier itime as is prescribed by the articles. Share qualifications are now relatively rare.

If letterheads and other business stationery include details Of directors, these should be amended hy the addition of the new director's details Letterheads must include details of either all, or none, of the directors.

The company's bankers should be advised of the appointment, The (board may need to alter the instructions as to signatories to (the company's ibartk account if the director is to be authorised to.operate the company's; bank account The company must always obtain the proposed director's particulars and consent to act on the official form.

This form must be lodged at Companies House within 14 days of the date Of appointment. There is no fee.

TEXT10

In the modern business world, the ownership of companies often changes. This may be a merger (two companies join together to form a new one), a takeover or acquisition (one company buys another one). The latter happens when a company offers to buy all the shareholders' shares at a certain price (higher than the market price) during a limited period of time. This is called a takeover bid. When a company tries to buy as many shares as possible on the stock market, hoping to gain a majority, this is called a raid.

If a company's Board of Directors agrees to a takeover, and the shareholders agree to sell, it becomes a friendly takeover.

Attempts to acquire companies in the face of opposition from existing management are described as hostile takeovers. The number of hostile takeovers relative to friendly takeovers is small: however, drama surrounds them, and they usually capture the interest of the press and the public.

Opponents of hostile takeovers, including the management of the target company, claim these takeovers are not on the best long-run interests of the corporate stakeholders, including the shareholders. The opponents' further claim that the " raiders" " will sell off assets to pay for the acquisition and severely cut back on research and development expenditures to conserve cash and to generate immediate increases in reported earnings.

Companies have various ways of defending themselves against a hosttle bid. They can try to find another company that they prefer to be bought by. Sometimes the companies choose issuing new shares at a big discount, which reduces the holding of the company attempting the takeover, and makes the takeover much more expensive.

A proxy fight' occurs when a group of outsiders try to gain control of a company by persuading existing shareholders to vote into office a new team o^! directors. The battle is similar to a campaign for elective office with the " outs' trying to replace the " ins". Proxy fights are expensive and seldom successful ir achieving all of their aims.

Another form of organizational restructuring is the buyout of publii shareholders by the existing management team. These buyouts result in stool ownership being concentrated in the hands of management and a few largi investors. The transaction transforms the company from an open or publicly hel< corporation into a closed or privately held corporation. The organizational changi is described as going private.

Investment banks have mergers and acquisition departments that advis companies involved in mergers and takeovers.

TEXT11

The term 'market' denotes a place where people buy and sell goods. There is, of course, no good reason why services should not also be sold in a market. For many years Lloyd's of London was the only place where representatives of buyers could meet sellers face to face but there are now similar markets in the United States.

Most insurance today is arranged by intermediaries acting on behalf of clients. Their job is to arrange insurances on behalf of people who ask them to do so but also to encourage people to insure in respect of needs whichjhe intermediary - being experienced in insurance and risk - makes them aware_gL

The buyers in the market are the public, industry and commerce as well as some local government and nationalised enterprises. Obviously there is a difference in the sizes of risks offered ranging from the contents of very small flats insured against fire, to large office blocks in the centre of a big town.

The people who offer insurance cover are the insurers who may be proprietary companies, societies, mutual indemnity associations or Lloyd's Underwriters. Insurance may be bought directly from companies at their branch offices or through their representatives. Most insurance, however, is arranged through intermediaries who are approached by prospective insurers or bring the need for insurance to the notice of their clients.

The intermediaries in the market are insurance brokers, agents, consultants and a variety of other people operating with differing titles. In some respects they all vary slightly in what they do, how they do it arid in their responsibility for their actions. Intermediaries act on behalf of their clients but are usually paid in the form of commission by the insurers.

Lloyd's, also known as Lloyd's of London, is a British insurance market. It serves as a meeting place where multiple financial backers or " members", whether individuals (traditionally known as " Names") or corporations, come together to pool and spread risk. Unlike most of its competitors in the reinsurance market, it is not a company. The Society of Lloyd's was incorporated by Lloyd's Act 1871.

Lloyd's syndicates write a diverse range of policies, both direct insurance and reinsurance, covering property, motor, liability, marine, aviation, catastrophe and many other risks. Lloyd's has a unique niche in unusual, specialist business such as kidnap and ransom insurance, fine art insurance, aviation insurance, marine, etc.

Reinsurance is a means by which an insurance company can protect itself with other insurance companies against the risk of losses. Individuals and corporations obtain insurance policies to provide protection for various risks (hurricanes, earthquakes, lawsuits, collisions, sickness and death, etc.). Reinsurers, in turn, provide insurance to insurance companies.

TEXT12

According to Colby Chandler, the former Chief Executive of Eastman Kodak Company, " these days there is not a discussion or a decision that does not have an international dimension. We would have to be blind not to see how critically important international experience is".

International companies compete with each other for global executives to manage their operations around the world. Yet what it takes to reach the top of a company differs from one country to the next. For example, whereas Swiss and German companies respect technical creativity and competence, French and British companies often view managers with such qualities as " mere technicians". Likewise, American companies value entrepreneurs highly, while their English and French counterparts view entrepreneurial behavior as highly disruptive. Similarly, whereas only just half of Dutch managers see skills in interpersonal relations and communication as critical to career success, almost 90 per cent of their British colleagues do so.

As companies integrate their operations globally, these different national approaches can send conflicting messages to success-oriented managers. Subsidiaries in different countries operate differently and reward different behaviours based on their unique cultural perspectives. The challenge for today's global companies is to recognize local differences, while at the same time creating globally integrated career paths for their future senior executives.

Global experience, rather than side-tracking a manager's career, is rapidly becoming the only route to the top. But in spite of the increasing demand for global managers, there is a potentially diminishing interest in global assignments, especially among young managers.

Yet there is always apparently a shortage of good executives, despite continuing general unemployment. The demand for capable managers keeps rising, because of the technological advances and because of the growth and increasing complexity of the economy. The problem is intensified by the fact that top executives cannot be created overnight. This means that an enterprise must plan carefully for future growth and develop managers years before vacancies occur. On account of the need for experience in management, executives cannot be hired like engineers or physicists directly after their university work. On the other hand, people who are hired as skilled accountants or secretaries may not necessarily make good managers, and their personal development cannot be predicted. Wherever they come from, low-level supervisors may be chosen largely on the basis of technical and psychological tests, whereas higher-level executives are generally judged by their achievements. The final selection is usually made by the immediate supervisor, who will, after all, be responsible for the subordinate's performance.

TEXT13

According to the Treaty establishing the European Community, the so-called Maastricht Treaty, the ECB¹ has the primary objective of maintaining price stability. Without prejudice to this objective, it is to support the general economic policies in the Community, with objectives such as economic growth and high employment.

Decisions on monetary policy are made by the Governing Council of the ECB. This body comprises the six executive directors of the ECB and the 11 governors of the national central banks (NCBs) of the Member States which have introduced the euro. These 17 people meet every fortnight at the ECB, in Frankfurt am Main. Decision-making on monetary policy is fully centralised. All members of the Governing Council have one vote, whether they come from Germany or Luxembourg. This is because of an important principle. They are not representing their country, but are obliged to take decisions on the basis of euro area-wide considerations. Regional or national monetary policy does not and cannot exist in the euro area. There is only one, single monetary policy for the euro area as a whole. Therefore, the ECB should develop into a truly European institution.

The execution of monetary policy is to a great extent decentralised. It is in large part carried out by the NCBs. The ECB and the 11 NCBs together are referred to as the Eurosystem. If we refer to the ECB and the 15 NCBs of all EU Member States, we speak of the European System of Central Banks (ESCB²). The General Council of the ECB meets quarterly and comprises the President and Vice-President of the ECB and the 15 governors of the NCBs of all the EU Member States. This body does not make decisions on monetary policy, but discusses issues concerning the relationship between the " ins" and the countries that can be called " pre-ins", such as exchange rate issues. The third decision­making body of the ECB is the Executive Board of the ECB, comprising the six executive directors of the ECB. The Executive Board is responsible for current business and the implementation of monetary policy as decided by the Governing Council. The staff of the ECB will, in the course of this year, reach a level of between 750 and 800 and is likely to grow further in the years ahead.

The ECB is one of the most, if not the most, independent central bank in the world. Its independence and that of the participating national central banks are firmly enshrined in the Maastricht Treaty. Members of the Governing Council are not allowed to take or seek instructions from anybody, politicians included. Politicians are not allowed to give such instructions. Members of the Governing Council have a term of office of at least five years. The ECB is financially independent. The reason for central bank independence is that monetary policy­making under the influence of politicians tends to focus too much on short-term considerations. This can easily lead to temporary, non-sustainable increases in growth, but inevitably results in lasting increases in inflation with no lasting gains in growth and employment at all.

TEXT14

You have a brilliant but unusual business idea. You could put your savings into it, and ask friends and family to invest in it as well. But this may not be enough. Or your friends may, perhaps wisely, refuse to lend you money. You go to your local bank, but they don't understand your idea and suggest you look elsewhere.

You go to a venture capitalist. Venture capitalists are used to looking at new ideas, especially in hi-tech industries, and they see the potential in your brilliant idea. The venture capitalist also recommends it to some business angels, private investors looking for new start-ups to invest in. They provide you with seed capital to set up your business.

You launch your business, and it's a great success. But the amount of money it generates from sales is not enough to invest in it further: it is not self- financing, so you decide to raise more capital in an initial public offering or IPO: your company is floated and you issue shares on a stock market for the first time, perhaps a market or a section of one that specializes in shares in hi-tech companies.

You wait anxiously for the day of the issue or float, interest from investors is high, and all the shares are sold. Over the next few weeks, there is a stream of favourable news from your company about its sales, new products and the brilliant new people it has managed to recruit. The shares increase steadily in value.

Now look at this process from the point of view of investors. The venture capitalists and business angels, for example, know most new businesses will fall, but that a few will do reasonably well, and one or two will, with luck, hi the jackpot, paying back all the money they lost on unprofitable projects and much more. This exemplifies the classic trade off between risk and return, the idea that the riskier an investment is, the more profit you require from it.

In your IPO, there may be investors who think that your company might be a future IBM or Microsoft, and they want to get it on the ground floor, hold on to the shares as they increase inexorably in value. They make large capital gains that can be realized when they sell the shares. Or they may anticipate selling quickly and making a quick profit.

Other investors may prefer to avoid the unpredictable world of tech stocks altogether and go for steady but unspectacular returns from established, well- known companies. These are blue chips that from the basis of many conservative investment portfolios. One day in a few years' time. When your company is mature and growing at five or ten per cent a year, rather than doubling in size every six months, your brilliant business idea may have become a blue-chip company itself.

Governments increasingly depend on investment from the private sector in public projects. These public-private partnerships are financed by a combination of commercial investment and public money from taxation and government borrowing.

TEXT15

The basic idea of international trade and investment is simple: each country produces goods or services that can be either consumed at home or exported to other countries.

The main difference between domestic trade and international trade is the use of foreign currencies to pay for the goods and services crossing international borders. Although global trade is often added up in U.S. dollars, the trading itself involves various currencies. Japanese videocassette recorder is paid for in euros in Berlin, and German cars are paid for in U.S. dollars in Boston. Indian tea, Brazilian coffee, and American films are sold around the world in currencies as diverse as Turkish liras and Mexican pesos.

Whenever a country imports or exports goods and services, there is a resulting flow of funds: money returns to the exporting nation, and money flows out of the importing nation. Trade and investment is a two-way street, and with a minimum of trade barriers, international trade and investment usually makes everyone better off.

In an interlinked global economy, consumers are given the opportunity to buy the best products at the best prices. By opening up markets, a government allows its citizens to produce and export those things they are best at and to import the rest, choosing from whatever the world has to offer.

Some trade barriers will always exist as long as any two countries have different sets of laws. However, when a country decides to protect its economy by erecting artificial trade barriers, the result is often damaging to everyone, including those people whose barriers were meant to protect.

The Great Depression of the 1930s, for example, spread around the world when the United States decided to erect trade barriers to protect local producers. As other countries retaliated, trade plumpered, jobs were lost, and the world entered into a long period of economic decline.

Trade agreements concern the exchange of goods, so economic factors loom largest. They are concluded by representatives of respective governments. There are either long-term trade arrangements concluded for a term of several years, or short-term agreements of a one-year validity.

The contracting countries undertake to promote and facilitate the exchange of goods stated in the commodity or quota lists as well as to favour the exchange of goods not mentioned there. They agree to grant the export and import licences necessary to achieve the exchange of goods, where such licences are required by the internal regulations of the contracting parties.

Both the contracting parties acknowledge that all payments shall be carried out according to the internal foreign exchange regulations of each country, and that payments shall be effected in accordance with the provisions of the payments agreement, if such an agreement has been concluded.

TEXT16

Accounting, or work of recording money paid, received, borrowed or owed, is frequently called the " language of business" because of its ability to communicoto financial information about an organisation. Various interested parties, such as managers, potential investors, creditors, and the government, depend on a company's accounting system, therefore, must include accurate collecting, recording, classifying, summarising, interpreting, and reporting of information on the financial status of an organisation.

In order to achieve a standardised system, the accounting process follows accounting principles and rules. Regardless of the type of business or the amount of money involved, common procedures for handling and presenting financial information are used. Incoming money (revenues) and outgoing money (expenditures) are carefully monitored, and transactions are summarised in financial statements, which reflect the major financial activities of an organisation.

Two common financial statements are the balance sheet and the income statement. The balance sheet shows the financial position of a company at one point in time, while the income statement shows the financial performance of a company over a period of time. Financial statements allow interested parties to compare one organisation to another and / or to compare accounting periods within one organisation. For example, an investor may compare the most recent income statements of two corporations in order to find out which one would be a better investment.

People who specialise in the field of accounting are known as accountants. In the United States, accountants are usually classified as public, private, or governmental.

Public accountants work independently and provide accounting services such as auditing and tax computation to companies and individuals. Public accountants may earn the title of CPA (Certified Public Accountant) by fulfilling rigorous requirements.

Private accountants work solely for private companies or corporations that hire them to maintain financial records, and governmental accountants are paid on a salary basis, whereas public accountants receive fees for their services.

Through effective application of commonly accepted accounting systems, private, public, and government accountants provide accurate and timely financial information that is necessary for organisational decision-making.

TEXT17

here are different manners of payment accepted In forolgn trade payment on an open account, which is usually affected against documont» and sometimes by instalments if agreed between the parties; payment for collodion, by $ draft which is an order in writing drawn on a bank or another firm to pay at sight, i e when it is presented or a certain number of days later,

The most generally practised manner of payment Is by a fettel of Credit which may also be affected by instalments in case of partial deliveries. Sinea the terms of payment in a contract are very often a combination of different mariners an advance payment can be specified too. Payment in cash Is very Infrequent and is practised in small transactions only.

The Letter of Credit (its abbreviation is L/C) is essential In the finance of international trade. It is a reliable and safe method of payment, and it protects the seller as well as the buyer. The seller (or exporter) needs the Letter of Credit because the buyer may be a new customer, and the exporter may know nothing about his credit " status". Even if the buyer is a regular customer, his credit with his bank may change from time to time and the seller's bank may not have enough information from the buyer's bank to arrange a banker's transfer, which is the other major method of financing international trade.

A banker's transfer is usually made through sending telegraphic transfer, sent from a bank by telegraph or cable to an overseas bank to pay money to an exporter in the overseas country. The overseas bank is usually a correspondent or agent bank, though sometimes banks have a branch in the overseas country.

The exporter is paid in local currency, and the bank usually keeps a balance with its branch or correspondent for this purpose. If both banks have teleprinters, the transfer is called a telex transfer.

In international transactions the Letter of Credit is not the only document that is worth studying. The seller must send a Bill of Lading, an Export Invoice (also called a Commercial Invoice) and a Certificate of Insurance before we can receive the credit.

The Commercial (or Export) Invoice is an invoice which is used in exporting and includes details of shipment, freight and insurance. The Export Invoice is a very important document, and is required by banks when they issue credit. It is one of the shipping documents. It must be carefully made out, as it is the basis for the Bill of Lading.

The Consular Invoice is a type of invoice which is necessary for importing goods into some countries. It states the value for the customs authorities in the importing country. The exporter must guarantee that all the details on the invoice are accurate, and must sign it. The consul of the importing country signs and stamps it also. The Consular Invoice helps the customs authorities to clear the goods quickly, and to calculate the import duty correctly. It is often used to stop sellers evading the payment of duty, and can be used to compile the statistics for imports.

TEXT 18

The European integration process continues the EU for its " obsession with its own internal н observers have criticised context of European Economic and Monetary Union ///After the historic decision to complete thP PnLnoJ. о., I

1980s, „ was felt that economic ^^ ZS^IXL'STt^SI 1 reap the rewards of economic integration within the Community, a single currency I was felt necessary; a logic pointedly encapsulated in the title of one report: " One Щ market, one money". Ц

Hence, the underlying idea of EMU was to advance European integration || and to ensure that full use would be made of the economic potential of the Щ Single Market. This idea continues to be the focus of European policy- Щ. makers, as evidenced by the association agreements and the ongoing % accession negotiations with a number of European countries. Good and Ц mutually beneficial economic relations with third countries in Europe and / further afield are a pillar of EU policy orientation. Recognizing this, the principles of an open market economy with free competition are enshrined in the Treaty on European Union. EMU will not weaken this commitment, but | rather reinforce it Closer co-operation in Europe and the respect of | common principles in the political, economic and social fields are likely to form the basis for further integration. The ECB shall contribute to this I process within the scope of its responsibility.

Countries wishing to deepen their monetary co-operation to the ultimate extent I possible by forming a monetary union will have to adapt their economic and legal I systems to the standards required by the Treaty and aim at a sufficient degree of 1 economic convergence. In the absence of these conditions, adjustment costs for both current and new participants could be high. Any premature decision on the adoption of the euro could have severe repercussions on a country's competitiveness and trigger painful economic adjustments. Therefore, implementation of the necessary institutional reforms and of a sufficient degree of convergence should not be considered as an obstacle preventing further integration in Europe, but rather as an essential means of ensuring the lasting success of EMU, for existing and new participants alike.

It is altogether natural that the ECB has started to follow with great interest economic and financial developments in the wider Europe, particularly in those

EU membershlP- moreover, the ECB monitors SL^dsoSSQltbeVe, °PmentS wrth those countries which have SSfSSabecome a Consequently, the public perceptionС°тт°П

with a role in the European integration proS^ " t™ the S, nQte GUrrenc* in the strict sense. process reaching beyond mmabn,

TEXT19

Every company is required to state in it* authorised share capital. Authorised share clnfan? randum the amount of its capital The amount of the company's initial SirL! fmuet, mes nominal sufficient to enable the company to ^Ша^тШЩШ ИЯ HI be on business in the Ж в^Та^п^М^0 ^ borrowing, in order to carry on business, it should have an authorised share capital of at least £ 1, 000. Of course, it will be easier for the company to sell 1 000 shares of £ l each than say four shares of £ 250 each, so shares are usually 'denominated' as £ 1 shares.

The statement must also state the number of shares in the authorised share capital, and the nominal (or par) value of each share. Although the nominal value of each share is usually £ 1, it may be any figure. Some shares may be of one nominal value and others of another, but this is unusual. The importance of the nominal value of a share is that no share may be sold by the company for less than its nominal value. J

Payment for a share need not be made immediately. It may be deferred for as long as the company and shareholder agree. However, most private companies require immediate payment when they sell the shares. Payment may be made in

any currency...,..

A company's share capital does not need to be in pounds sterling. It may be denominated in any currency. However, once a share has been issued, it can-not be changed to a nominal value in another currency. The company s annual accounts need not be prepared in the currency of the company s share capital.

The authorised share capital of the company may be sold by the company until it is exhausted. A share sold by a company is said to be issued, or allotted. Directors usually deal with the issue of shares. If further authorised share capital is required, the directors must ask the company's shareholders to increase the authonsed share capital by a further sum, and specify the number and nominal value of the new shares. This is done by ordinary resolution.

A copy of this resolution must be lodged with the registrar of companies, together with an official form, within 15 days after it is passed.

A private company may operate with only one share in issue - the minimum number required by law. There is no need to issue all of the authorised share capital, or even a major proportion of it, provided at least one share has been issued. However, for historical reasons, most private companies are formed with at least two shares issued from the outset, even if the company is intended to operate as a single member company. The same is not true of public companies which must be formed with an issued capital of at least two shares, and may not trade or borrow money unless Г °ff has certified that th«y have a minimum issued

dMdedtntcfclasses. A СОтраПУ may have an ^orised «" are capita.

соГп/Гг^ КАИЛЕ wil" ^be 'entitle!? ЛЕ" J? dividends, etc. in respect of the jointly held share To the sec J^ ^® n°t, CeS' must be sure that the register is made up in accor^nД of the сотРапУ

£ int shareholders. P accordance w*h the wishes of the

TEXT20

Although much more commerce is now takino пь„ internet, there are still occasions when you will need Xj\PeTn ^ may have ordered goods that never arrfves, " 0! SlTe^^^ you may need to correct a transaction or ask for a refund. You ma/wish to protest at a proposed expansion or the closure of your local branch. Or you may need to complain about the service you received at a hotel or restaurant.

All letters to businesses should be written in a formal style, no matter how small or informal the business.

When writing to any financial institution, be it bank, building society, insurance company or a credit card company, you need to be especially clear in your instructions and requests. Although more and mo