A lecture given to university students (in a Business English class) looking at company structures and the broad range of terminology that can accompany it.

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Business English:
Company Structures
Darren Ingram
January 2015
This is a slightly modified version of a given lecture with
learning exercises removed.

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Introduction

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Ongoing Questions?
Shout them out!
Source: Wikipedia

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What Is A Company?

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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)

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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)

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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)

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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)

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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

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Differences Can Exist
Unless stated examples shown are based on British law
and practice. Seek legal advice if you need it!

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Legal Structures
• Sole Trader
• Limited company
• Partnership
• Unincorporated Association
Slight differences can exist between English/Welsh
& Scottish/Northern Irish company law/registration.

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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

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• Possibly liable to Value Added Tax (VAT)
• Potentially less favourable taxation system
• Succession planning problems

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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

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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

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Director’s Responsibilities:
Try to make the company a success, using their skills, experience
and judgment
Follow the company’s 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

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There’s 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 company’s records, accounts and performance.

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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”)
• Director’s loans (capital inflow and outflow)

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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

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• 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

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• 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

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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 company’s
status, i.e. limited, public limited, etc.
Image:CompanyWizardUK

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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

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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)

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• 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)

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• Independent audit of accounts is mandatory
• Quarterly supervisory board meetings required
• Greater public profile
• Easier to sell shares / take inward investment

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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

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Privatisation
PrivatisationinBritainduring1980'sunderMrsThatcher,(C)BBC2007.
https://www.youtube.com/watch?v=Z7Qq01tC0lU

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Share Classes

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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 (share’s face value) returned.

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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).

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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.

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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 company’s 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.

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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.

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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.

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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.

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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 firm’s debts.
Commonly called “ordinary” business partnership.

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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.

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Limited Partnerships
• A “general partner” can be personally liable for all
the partnership’s 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.)

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Limited Liability Partnerships
The partners in an LLP aren’t personally liable for
debts the business can’t 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.

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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.

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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.

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Company Types
• A company can also:
• a dormant company
• a trading company (in operation)
• a company in receivership or liquidation

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Key Job Titles

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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.

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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

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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)

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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

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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

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Linguistic Differences

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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.

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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

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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.

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Listening Test
How many business-related terms can you pick up?
Extractfrom“MaryPoppins”(C)1964WaltDisneyProductions
https://www.youtube.com/watch?v=XxyB29bDbBA

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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…

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Business Jargon:
taking a “helicopter view”

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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 don’t
really understand its true meaning.

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Get a rapid 360-degree
overview of contemporary business jargon
MissionStatement/"WeirdAl"Yankovic,(C)2014
https://www.youtube.com/watch?v=GyV_UG60dD4

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AOB
Another business shorthand term: Any Other Business

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Questions?
Disagreements?
Darren Ingram
darren@ingram.fi
linkedin.com/in/DarrenPIngram
about.me/DarrenPIngram