Aktiengesellschaft

Aktiengesellschaft (IPA2|'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 equivalent term in the United Kingdom and Republic of Ireland is PLC. The United States equivalent is "publicly-held/open corporation." 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.), Hungary ("Részvénytársaság", Rt.), Slovakia ("akciová spoločnosť", a.s.), the Czech Republic ("Akciová společnost", a.s.), Serbia ("akcionarsko društvo", a.d.), Russia ("Открытое акционерное общество", OAO), 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 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.

Legal basis

The legal basis of the AG is, in Germany and Austria, the respective [http://www.bundesrecht.juris.de/bundesrecht/aktg/gesamt.pdf 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.

ee also

*Gesellschaft mit beschränkter Haftung (GmbH; limited liability company)
*Aktiebolag (the corresponding concept in Sweden)
*Aktieselskab (the corresponding concept in Denmark)
*Aksjeselskap (the corresponding concept in Norway)
*Naamloze Vennootschap (the corresponding concept in the Netherlands and Belgium)
*Osakeyhtiö (the corresponding concept in Finland)
*Public limited company (the corresponding concept in the UK and in Ireland)
*S.A. (the corresponding concept in France, Spain and several other countries)
*Societas Europaea (the corresponding concept for European companies in the European Union)
*Types of business entity (international list of company types)