- [Nicole] Hello everyone. So this next lesson is about company structures. Warning, it could be a little bit boring but some people are really nerdy about this stuff and really interested in it. So whatever floats your boat. But I do think ultimately it's really important to understand just the basics of how companies work and kind of see that in a context of capitalism and how these structures like serve companies. 

So yeah, the aims of this section are to get a very basic understanding of common company structures in the UK. Sorry for anyone internationally that this is all UK focused. Yeah, but I do think there will be similarities across the board in terms of understanding different structures, but you will need to really look at your kind of regional specifics. And the other aim of this section is yeah, to begin to reflect on how these structures enable corporate behaviour and capitalism. Okay. So yeah. 

Just a warning like they can be very, very complicated. And this is an absolutely butchered kind of simplified introduction. I think the key thing to understand is that like companies on their own are like a legal entity and they are distinct from the people who run them. So you can kind of imagine them like their own person. So they have legal rights and duties. Companies can enter into legal relationships. So for example, they can be sued or they can sue others, they can own property, they can enter into contracts, and they can also be prosecuted mostly, well, by fines. And different kind of company structures means there's like different responsibility for liabilities. So I'm not like again, liability is like very complicated topic so I'm not going to go into it. But if you kind of think about it as like, these are ways that companies are able to protect themselves from bad debts or their kind of external behaviours, maybe it's pollution, maybe it's, you know, the kind of social costs of, you know, harming workers with poor working conditions. Like, you know, having a company being its own thing is a way to like protect individuals from criminal and financial liability. So from responsibility for their actions. 

So now I'm going to kind of whiz through different types of company. So in England we have, well in the UK we have companies limited by shares. So these are kind of private companies. So again, they have their own legal personality and this company is owned by its shareholders. And we're going to introduce shareholders in the company accounts module. So that will kind of become a bit clearer. Again, the liability, so like kind of like the responsibility of each shareholder is limited to the amount of capitals, the amount of money that they have contributed to the company. So if the company is like unable to pay its own debts for example, shareholders may lose what they personally kind of, personally kind of own in their shares but they're not like liable for their company's debts as an individual. Which you can tell is really convenient, right? For the capitalist. 

Public limited companies, PLCs, are also, you know, limit, have their own kind of legal personality but their shares can be sold to the general public. So it's not just kind of a private behind doors group of people that own them it's, you know, people can buy them on the stock exchange and yeah, or in other ways. So, you know, these shares are like sold to the public to enable the company to get a lot more investment. And yeah, shares don't have to be but they can also be listed on public stock exchange like the London Stock Exchange for example, the New York Stock Exchange. And yeah, this is like a whole other world of finance which is absolutely fascinating, but we're not going to be looking into this stuff that much more but we are going to be returning to the concept of shares in our accounts module. Partnerships, so this is like two or more partners running a business together. There's maximum a 100 people. The kind of profits and losses can be shared between the partners and each partner will kind of pay tax on their share of the profits. But partners are generally like not protected by limited liability. So, you know, if things go tits up then, you know, they don't have the same protection that a limited company would have, for example. But you can also get limited liability partnerships. 

So... Yeah, this is again, similar model. There's like two or more partners running the business in common, maximum a 100 people, profits and losses can be shared between the partners and each partner pays a tax, you know, pays tax and their share of the profits. However, like they have kind of protected themselves from that liability hence the limited liability. And you often see these things in like, you know, like legal firms for example are often LLPs. And then you get sole traders. So this is when an individual will own like a 100% of their own business and they don't have that separate legal protection. So they're responsible for all debts. So if you're a sole trader, you know, for example, this person on the left is a plumber. They're responsible for kind of any debt they have in the business as an individual. But the only good thing, one of the good thing like there's lots of, you know, advantages and disadvantages to all these models. But one reason why people choose to stay as a sole trader is that they don't need to submit their accounts every year to Companies House where people can look at them like us doing research. Obviously they'll have to do their personal tax returns but they don't, you know, there's a lot more privacy than you know, a public limited company, for example. 

Okay, and then there's other different company structures. So there's companies that are limited by guarantee. So again, these are privately owned and they generally don't have shares and are set up usually to be not-for-profit. So Corporate Watch, for example, is limited by guarantee. We don't have shareholders, but we have... We have members. So technically we have a board of directors. But we still have this kind of separate legal personality which is, you know, reducing the risk of our debt and other liabilities that we could be responsible for. And then we have things like community interest companies. So again, they can also be limited by guarantee or shares or be a public company. They can be a cooperative or not-for-profit and they're generally used by social enterprises. So I also have a community interest company which teaches people to grow food in my local area with a small workers co-op. And as our kind of community interest company we have to complete a form with our annual accounts which says everything we've done that year like how many people we've taught how to grow food or how many workshops we've held, things like that. And we have something called an asset lock. So this means that people that aren't members can take control of the CIC. And it also means that we can individually profit from it. You know, we might be able to take a salary but we're not able to kind of walk away from that business with millions of pounds. I wish obviously it doesn't happen. But yeah, this is kind of an interesting company model. And yeah. Okay. 

And then we also have Industrial and Providence Societies. So they're meant to, you know, operate for the benefit of the community. Generally run and owned by members and have their own legal identity. They're also regulated by the Financial Services Authority. And we might have a bit of, a lot of romantic idea of some of these companies, you know, like the non-profits and, oh, it's great that people can individually profit from things but just because a company is one of these structures doesn't necessarily mean they're not causing harm somewhere. You know, loads of housing associations, for example, are set up as these Industrial and Providence Societies and could be awful landlords to tenants or, you know, putting up rent prices to pay for expensive directors or whatever. So, you know, just look at the company structure with interests but take it with a pinch of salt. And then there's also trust. So there's obviously different types of trusts like you know, so many different types. And they're generally managed by trustees. So a group of people that are managing that money and they're commonly used as a way to protect assets. And unlike other forms of companies where you can find a lot of information, trusts are generally quite impenetrable. And you know, you might get genuine kind of charitable trusts that are really set up to give out grants and things and set up by, you know, maybe someone who's lost a family member and they've put some of their assets in a trust and that's helping people or they could really be used for tax evasion or, you know, setting aside money for different groups or whatever or sustain certain people's trust funds, whatever, you know, but all of these different structures can kind of be utilized in different ways for different ends. 

And then there are charities. So there's many, there's like a number of different options. They should be regulated by the Charities Commission. And yeah, they are also limited by guarantee. And yeah, charitable incorporated organization are only registered with the Charities Commission but they don't have to submit accounts to Companies House. So again, you might end up researching a charity. Like I said, like it's not just corporations that are, you know, doing bad shit in the world, it's all sorts of people and it's really useful to understand all the different structures available. So yeah, just to like wrap this up, I know that's like a very quick tour of structures but at Corporate Watch like we do like to connect these, you know, these things back to bigger issues and like looking at how these structures enable corporate behaviour. So what does not having liability for your actions mean? What does being able to get into debt and then, you know, close your company down mean? You know, how was that potentially encouraging certain, you know, certain kinds of financial decision-making or behaviour or risk-taking with people's livelihoods? And you know, like ultimately how do these kinds of companies structures serve capitalism? So I think yeah, they're really important questions to think about. And we've definitely got publications where we've explored some of these issues for a number of years. So yeah, there's a few resources on the website. These are from our DIY guide again. So we've got more information about different types of company and we've got a whole other chapter about company law. So those might take your interest.