individuals (ca nhan) and groups of people doing business as a partnership (quan he doi tac ) have unlimited liability for debts unless they form a limited company. if the business does badly and can not pay its debts any creditor can have it declared bankrupt. the unsuccessful business people may have to sell nearly all their possessions in order to pay their debts .this is why most people doing business form limited companies . a limited company is a lehal entity separate from its owners and is only liable for the amount of capital that has been invested in it . if a limited company goes bankrupt it is wound up and its assets are liquidated to pay the debts . if the assets don't cover the liabilities or the debts they remain unpaid . the creditors simply do not get all their money back.
The act of issuing share(gb) or stocks ( us ) for the fist time is known as floating a company ( making a flotation ). companies generally use an investment bank to underwrite the issue . i.e to guarantee to purchase all the securities at an agreed price on a certain day ,if they can not be sold to the public.
Companies wishing to raise more money for expansion can sometimes issue new shares . which are normally offered first to existing shareholders at less than their market price . this is known as a rights issue . Companise sometimes also choose to capitalize part of their profit , i.e turn it into capital, by issuing new shares to shareholders instead of paying dividends . this is known as a bonus issue.
Buying a share gives its holder part of the ownership of a copany. share generally entitle their owners to vote at a company's Annual General Meeting or Annual Meeting of Stockholder and to receive a proportion of distributed profist in the foem of a dividend or to receive part of the company's residual value if it does in to liquidation . shareholders can sell their shares on th secondary market at any time but the market price of a share- the prica quoted at any given time on the stock exchange which reflects ( more of less ) how well or badly the company is doing - may digger radically from its nominal value.
A successful growing company can apply to a stock exchange to became a public limited company (gb) or a listed company (us) .newer and smaller companies usually join " over- the - counter " markets , such as the unlisted securities market in london or Nasdaq in New york . vary successfull businesses can apply to be quoted or listed ( i.e to have their share traded) on malor stock large number of requirements including sending their shareholders an independently-audited report every year containing the year's trading results and a statement of their financial position.
