Entrepreneurship and Management 2.2. CORPORATE GOVERNANCE: A CORPORATION

Joint-stock company (JSC) A business entity in which different stocks can be bought and owned by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Thomas B. Courtney, The Law of Private Companies Basic features: big charter capital equal value of shares shares’ ownership may be transferred limited liability of owners managing bodies compulsory disclosure of financial statements compulsory audit Basic types public JSC (public co., publicly traded co., publicly held co., public corporation) private JSC (privately held co., close corporation, unquoted co., unlisted co.) Special types “opened” and “closed” companies in some CIS members Societas Europaea (SE) in the EU

Limited liability company Also “private limited company” A combination of partnership’s way of operation with limited liability of owners. Usually de facto a specific form of a private JSC less formal requirements, more freedom less minimal charter capital shares are tradable, but not on free market not anonymous ownership in some legislations: forced expropriation ban on certain activities in some legislations: different tax regime

General meeting of shareholders Competences decisions summing up a business year: approval of reporting documents distribution of profit decisions on management appointments remuneration crucial organizational and property issues changes in the charter etc. changes in assets changes in liabilities approval of the biggest transactions decisions on shareholders’ rights Meetings: annual general meeting (AGM) extraordinary All owners, voice proportional to shares simple and qualified majority measures against violation of minorities’ rights voting cap voting in groups

Supervision body Supervisory board (council), board of directors (partly) Functions realization of shareholders’ interests realization of broader interests: stakeholders and the company Decisions strategies setting realization of AGM decisions on assets preliminary approval of annual reports and statements creation of executive structures decision on structures personnel decisions creation of financial control system internal and external audit In order to function efficiently must be professional must be neutral

Executive body Executive board, managing board, chief executive officer (CEO) etc. Great variety of solutions Basics: autonomous body  competencies internal: managing the company external: representing the company vis-à-vis third parties in judicial matters in business matters problems of competencies whose agent? agency problems