Company law 2
A Private and public companies
Private companies usually have ‘Limited’ or ‘Ltd’ at the end of their name. They are not allowed to sell their stocks or shares on open market. Most companies are private; there are about one million private companies in Britain, compared to around 2,000 public limited companies (PLCs). These companies have ‘plc’ at the end of their name, and their shares are publicly traded on the London Stock Exchange. A stock exchange is a market where anyone can buy stocks and shares. The US equivalent of a PLC is a company or corporation registered with the Securities and Exchange Commission (SEC).
SEC-registered companies, also known as listed companies, have to make quarterly reports (i.e. every three months). They report on:
-sales revenue or turnover-the money received by the company in that period from selling goods or services
-gross profit-turnover less cost of sales
-net profit-gross profit less administrative expenses and tax.
Companies on the London stock Exchange, known as quoted companies, have to produce a half-yearly interim report which informs shareholders about the company's progress. these reports are not audited.
All companies with shareholders or stockholders have to send them an Annual Report each financial year. this contains a review of the year's activity, and an examination and explanation of the company's financial position and results. there are also financial statements and notes (see Units 11-14),and the auditors' report on the financial statements
BARCLAYS PLC lnterim Report 2004
• Group performance was very strong:
-profit before tax up 23% to f2,411m
-earnings per share up 25% at 26.7 p
- dividend per share up 17% to 8.25p
-return on equity of 20.4%
• All businesses had higher profits,demonstrating progress across the whole portfolio.
• lncome growth was particularly strong, up 14%, with good broad based contributions by business and by income type.
B AGMs
Public companies have to hold an Annual General Meeting (AGM), and most private ones do too. At this meeting the shareholders can question directors about the content of the Annual Report and the financial statements, vote to accept or reject the dividend recommended by the directors, and vote on replacements for retiring members of the board. The meeting can also carry out any other business stated in the company’s Memorandum of Association or certificate of Incorporation, and Articles of Association or Bylaws.
If there is a crisis, the directors or the shareholders can to hold an Extraordinary General Meeting (EGM) to discuss the situation. For example, if there are claims of misconduct by the directors, where they have behaved illegally, there could be an EGM.
BrE: Annual General Meeting (AGM); AmE: Annual Meeting of Stockholders
BrE: Extraordinary General Meeting (EMG); AmE: special Meeting