Homework Check: Vocabulary Review/“CV” and Interview Key terms: Barrister Solicitor Clients Defendants Plaintiff Complainant Legislation Statute Directive Ordinance Clerk Associate Dispute Admitted to the Bar Affidavit Answer Brief Complaint Injunction Motion Notice Pleading Writ

Homework Check: Review, “CV” and Interview Verbs 1. advise 2. draft 3. litigate 4. practise 5. represent 6. research Nouns Law Corporations Cases Disputes Clients Contracts Legislation Decisions Defendants

Unit 2 Company Law: Company Formation and Management

Reading 1: Discussion What are the most important companies and partnerships in Turkey? What is the difference between a company and a partnership? What sorts of documents are required when forming a company in Turkey?

Reading 1: Introduction to Company Law The purpose of this unit is to provide students with the language they need to explain details of company law to their clients, and to contrast their system with others. An important concept in company formation is liability. Liability is legal responsibility for what you do (such as causing an accident) or what you fail to do (such as paying taxes or paying bills). (Liability is a noun. Liable is the adjective form) Reading 1 explains a difference in how a company and a partnership are different. A company can be held liable (rather than the owners, who are insulated from liability) whereas a partnership is usually not liable (meaning that partners are not insulated from responsibility).

Reading 1 Much of the variation among different types of companies around the world concerns the extent to which the owners are liable. For example, in a limited liability company (L.L.C.), investors may lose their investment, but they are otherwise not liable for the companies financial problems. LLC: a US business entity whose members cannot be held liable for the acts or debts of the company and which may choose to be taxed as a partnership. The limited liability company (LLC) may soon replace the traditional partnership as the dominant business form for the practice of law. t is well-suited for companies with a single owner. “(From Translegal Online dictionary) There is also a limited liability partnership (LLP) which, unlike normal partnerships, does limit the liability of partners.

Reading 1: Terms Entity: (noun) anything or person that exists as a single and complete legal or financial unit. Fraud: (n) if you commit a fraud then you deliberately lie or do not give important information because you want someone else to rely on (=put trust in) this lie or incomplete information so that they will give up something of value, usually money Procedures: (n) actions that make up the official way of doing something Insulate: (verb) protect (noun; insulation) “insulate against” Ultra vires: beyond the legal powers of a person or entity Certificate of incorporation: a document issued by a governmental authority granting a company status as a legal entity

Reading 1 The Five Most Important Types of Companies in the US: 1) A sole proprietorship has one owner. 2) A partnership has more than one owner who all tend to be responsible. 3) In a general partnership, the individual partners share rights and responsibilities. 4) In a limited partnership, there are limited partners – who have no liability and one or more general partners who are liable for the obligations of the business. 5) Corporations: “C” and “S”: Most large US corporations (including all publicly-traded companies) are “C” corporations and pay corporate taxes. “S” corporations tend to be smaller and are taxed through their owners (i.e. profits and losses are passed directly to the owners who declare them as part of their personal taxable income.)

Reading 1 Note: “S” and “C” refer to sub-chapters in the US Internal Revenue Code. The UK makes no distinction between the two. The UK distinguishes between private limited companies (Ltd.) which are privately owned, and public limited companies (plc.) which are publicly traded.

Reading 1 Fiduciary duty: (adj) the legal duty of a professional in a position of trust to act in the best interests of a client An important distinction between companies is between those whose shares are traded publicly and those whose shares are traded privately. Both companies have shareholders, but the way the shares are bought and sold affects the legal requirements of the company. Each have different kinds of restrictions concerning the amount of money invested by shareholders as well as the number of shareholders.

Key Terms: Roles in Company Management Flash Card Activity

Key Terms: Language Notes To take the initiative to do something: to do something without anyone telling you to do it. Compliance with (something): doing everything necessary to obey or follow the rules or laws By virtue of (something): thanks to; or as a result of To wind up (something): to deal with or finish something after it has finished. (ex. “Let’s wind up this meeting and go home.”) To be wound up (by a court): passive form The corporate veil: the general principle that a company's shareholders and employees are immune from civil lawsuits filed against it

Listening 1: Language Notes A DBA (“doing business as”) filing is a document which states the name of a company. It must be filed by all sole US proprietorships, apart from persons doing business in their own name. (If the company is under your name you are exempt.) A stock ledger is a record of each shareholder’s ownership. Bylaws (US) are a company’s or partnership’s written rules for conduct in the company (e.g. how directors are elected, who is responsible for what, etc.) They must be formally adopted or amended (changed). A general partnership agreement is a contract between the partners in a general partnership, outlining the rights and responsibilities of each.

Listening 1: Language Notes IRS (Internal Revenue Service) is the U.S. tax office and state “S” corporation: A state S corporation is one with fewer than 75 shareholders and is taxed as if it were a partnership. Stock certificates (US) are share certificates in the UK. Duly: (adv) “properly and at the expected time”

Listening 1 Listen to the conversation and tick the documents required for formation that the lawyer mentions. DBA Filing Articles of Incorporation Stock ledger General partnership agreement Stock certificates IRS and State S corporation election Bylaws Organizational board resolutions

Reading 2: Memorandum of Association A memorandum of association sets forth or stipulates the objects of the company and its capital structure. (What it is in possession of and how people invest in it.) It is a legally binding document of intent to which the members of the company must adhere. The same document is called an article/certificate of incorporation in the US. Capital structure: how a company finances its assets; equity, debt or securities Legally binding: valid; under the law Adhere (to): (v) “stick to”; must follow

Language Use Alter: (v) change Amend: (v) to add to Repeal: (v) to take back; to cancel Vested in: (v) given to; placed in Adopt: (v) to take on legally Provided: (v3) “on the condition that” In lieu (there)of: “instead of” Shareholders: (n) people who own shares of a company Proscribe: (v) prohibit; ban Prescribe: (v) stipulate

Language Use “Shall” and “May” In legal terminology, the word “shall” prescribes obligation or something that someone is required to do. Ex. “All citizens shall pay taxes.” Meaning all citizens are required to pay taxes. The word “may” is used to indicate permission. (formal/legal meaning) Ex. “The contract may not be altered by anyone…” In everyday English, “may” is used to indicate possibility or probability. Ex. “You may want to check your , there is some good news.”

Speaking: Informal Presentation “A type of company…” With the instructions provided in the book, think about.. – What kinds of companies are there in your jurisdiction? Choose one and describe it as well as you can for a client in another country. – Tell your client which forms must be completed and whatever is relevant to the registration process. – Be prepared to answer a question or two from your colleagues.

Reading 3: Limited Liability Partnership Bill Questions: 1) Why is the Partnership Act of 1890 unrealistic? Because under the act, a partner is liable for his own acts as well as those of his partners. 2) In paragraph 2, what is the major change in relation to liability? Obligations accrue to the name of the partnership rather than the individual members. 3) In general terms, what is a drawback of the bill for the partnership? The applicable accounting requirements will be more stringent, perhaps even professionally audited.

Conclusion Reading 4: Corporate Governance Text Analysis: A Letter of Advice Homework: – “Writing: A Letter of Advice” p. 31 – Worksheet 2.1