Everything about Aktiengesellschaft totally explained
Aktiengesellschaft (; abbreviated
AG) is a
German term that refers to a
corporation that's limited by
shares, for example 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).
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.
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's 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.
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.
Further Information
Get more info on 'Aktiengesellschaft'.
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