Aktiengesellschaft

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Aktiengesellschaft (IPA: ['aktsiəngəzεlʃaft]; abbreviated AG) is a German term that refers to a corporation that is limited by shares, i.e. owned by shareholders, and may be traded on a stock market. The term is used in Germany, Austria, and Switzerland. The United States equivalent term is "public company." The equivalent term in the UK is PLC. It is generally considered equivalent to an S.A. when comparing with other civil-law jurisdictions.

Several countries have similar forms of company: Italy (Società per Azioni, S.p.A.), Denmark (Aktieselskab, A/S), Norway (Aksjeselskap, AS), Sweden (Aktiebolag, AB), Poland (Spółka Akcyjna, S.A.) Slovakia (akciová spoločnosť, a.s.), the Czech Republic (Akciová společnost, a.s.), Serbia (akcionarsko društvo, a.d.), and Finland (Osakeyhtiö, OY), among others. All have names that more or less literally translate to "Aktiengesellschaft" (for meaning see below), although their structures differ (for instance, an Italian S.p.A. is closer to a French S.A. than a German AG).

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[edit] Meaning of the word

The German word Aktiengesellschaft is a compound noun made up of two elements: Aktien meaning shares, and Gesellschaft meaning company. However to translate it as "share company" is misleading, since other types of German company also have shares, although these shares are called Anteile rather than Aktien. A similar distinction exists in other languages; for example, in Polish the two types of share are called akcja and udział.

[edit] Reasons for setting up a corporation

When a corporation is started, it often must collect a lot of money to pay for startup costs, and banks provide only a limited amount, especially if it is unknown whether that corporation is going to earn enough money to repay all the loans plus interest on time. However, some members of the public will take a risk and provide money in exchange for a piece of paper, or just a book entry, that can be sold to others on the stock market, and that has a value that fluctuates, depending on, for example, whether the shares concerned will pay dividends, and if so, how much per year, or what percentage of the current price of the shares. Also, shares usually come with voting rights, so shareholders can dictate the direction of the company, and the power one holds depends on the amount of shares that one possesses.

[edit] Legal basis

The legal basis of the AG is, in Germany and Austria, the respective Aktiengesetz (abbr. AktG), in Switzerland a part of the Obligationenrecht (OR). As the law requires all corporations to specify their legal form (which gives the limitation of liability) in the name, all German and Austrian stock corporations bear Aktiengesellschaft or AG as part (usually suffix) of their name.

[edit] See also