PART 1: INTROdUCTION
Limited Liability Companies in Other Industrialised Countries
Although LLCs exist around the world, they have different names in different countries. In Britain,
they are called public limited companies (plc); in Germany, Aktiengesellschaft (AG); in France, Société
Générale (SG); and in Spain, Mexico and elsewhere in Latin America, Sociedad Anónima (SA). Details
vary, but all of these structures are similar to publicly traded companies. Key differences between
international and Australian companies revolve around tax treatment of business income and the amount
of information that publicly traded companies must disclose. Tax rules are typically, though not always,
harsher in Australia than elsewhere, and disclosure requirements are almost always greater for British
Commonwealth and US companies than for companies in other countries.
Many countries also distinguish between LLCs that can be traded publicly and those that are
privately held. In Germany, Gesellschaft mit beschränkter Haftung (GmbH) are privately owned, unlisted,
limited-liability share companies. In France, these are called Société à Responsabilité Limitée (SARL).
Private (unlisted) companies, particularly family-owned companies, play important roles in all market
economies. For example, Germany’s phenomenal post-Second World War growth was propelled by
midsized, export-oriented companies that pursued niche marketing strategies at home and abroad. These
mittelstand (middle market) companies have been prominent in German industrial growth, although
other European countries, such as the UK, are apparently catching up with their successes.^4 A similar
set of relatively small, entrepreneurial family-owned companies has helped propel some Asian nations to
growth rates consistently higher than those achieved in the industrialised West.CONCEPT REVIEW QUESTIONS 1-3
6 What are the costs and benefits of each of the three major organisational forms – the sole
proprietorship, the partnership and the company – in Australia? Why do you think the various
hybrid forms of business organisation have proven so successful?7 Comment on the following statement: ‘Sooner or later, all successful private companies that are
organised as proprietorships or partnerships must become companies.’1-4 THE CORPORATE FINANCIAL
MANAGER’S GOALS
In widely held companies, the owners typically do not manage the company. This raises the interesting
question: whose interests should managers serve? Those of shareholders, creditors, customers or
employees? The traditional answer given in finance textbooks is that managers should operate the
company in a way that maximises shareholder wealth. As a practical matter, that recommendation is
difficult to implement, partly because managers may be tempted to pursue their own interests rather
than shareholders’ interests.4 ‘Medium-sized UK firms add more to economy than German peers – report.’ The Guardian, 3 March 2015. http://www.theguardian.com/
business/2015/mar/02/medium-sized-uk-firms-add-more-economy-than-german-peers-report. Accessed 12 December 2015.