L3 Exam.

M. S. Maliki
Investing in a Limited Company

When a limited company has started trading, one does not invest in shares by giving
more capital to the company. Instead, one can buy them from one of the existing
shareholders. If it a private limited company, a shareholder can only sell shares if all
the other shareholders agree. If, however, it is a public limited company, shares can
be bought and sold freely at the stock exchange, regardless of the other shareholders’
position. If the company is doing well and paying high dividends, then one might pay
more than the face value of the shares; If, in contrast, it doing badly, one might pay
less than the face value of the shares. The price one pays at the stock market (or to a
shareholder) is their real or market value.
When the company fails, it will stop trading and go into liquidation. This means that
all the company’s property and equipment (its assets) must be sold and the money
from the sale will be used to pay its debts to its creditors. The shareholders may lose
the money they paid for the shares. If the company still does not have enough money
to pay its debts, the shareholders do not have to pay any more money. In other words,
the shareholder’ liability for debts is limited to the value of their shares.
On the other hand, if you are an owner of a business which is not limited, for example
a sole proprietorship (owned by one person) or a partnership (owned by between 2
and 20 people) and your business fails, you will go bankrupt. In this case you might
have to sell your own private possessions (your house, car, furniture etc) to pay all
your creditors. In other words, sole proprietors and partners have unlimited liability
for their firm's debts.

A. Answer the following questions (5pts)

1. What types of companies are mentioned in the text?
2. What is the difference between a private limited company and a public
limited company?
3. What happens when a limited company fails?
4. What is the name of the owners of each type of these companies?
5. What happens when an unlimited business fails?

B. Find words in the text which mean (2.5pts)

1. The money shareholders put into a company to start activity.

2. The price you pay for shares when the company has existed and started activity.
3. Something belonging to a person or a business which can be sold. Asset
4. A person who has shares
5. Part of the profit that a company gives to its owners

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C. Match the words below with their definitions (5pts)

1. Acquisition a. money paid by government to needy people

2. Joint venture b. the ability of a business to make money
3. Consortium c. movement of large sums of money out of a country
4. Franchising d. two or more companies in similar business working together
5. Licensing e. a company partly or wholly owned by a parent company
6. Local partner f. giving someone exclusive right to sell products in an area
7. Subsidiary g. selling the right to a manufacturer’s trade mark
8. Welfare benefits h. taking over another company
9. Profitability i. a company that cooperates with a foreign one
10. Flight of capital j. a group of companies join together to carry out a large project

D. Cross out the incorrect option in each list (2.5 pts)

1. A large number of buildings were upgraded (last year/over the last few years/since
2019)

2. How money new products have they launched (so far/in 2020/ till now)

3. They have (never/already/yet) reorganized their business operations

4. Unfortunately, we didn’t develop our warehouse (when we had the money/for the past
5 years/2 years ago)

5. This is the first time I (saw/ see/ have seen) such a fantastic design

E. Write a well-organized paragraph on ONE of the following

(5pts)
1. What are the qualities of a good manager?

2. What is architecture?

3. Write a mail to a friend explaining why you want to be an architect/ landscape

engineer