Business Analysis of Northumbrian Water

There was a merger of Northumbrian water and Essex and Suffolk water in April 2000

Northumbrian water is owned by Suez. Suez was formed in 1858 and has its headquarters in Paris. It revenue amounts to £27 billion. 60% of this revenue is generated outside France. It has a total of 220,000 employees. It has 100 million customers in over 110 countries. Suez also owns ONDEO which is a water company, Tractebal which is an energy company, S.I.T.A which is a waste services company and various communications companies.

Benefits:

* The sales of shares can raise capital

* Owners have limited liability

This means that their personal possessions are not at risk.

* The company has a separate legal identity from its owners

The company is seen as a person in law. Therefore, its owners cannot be sued

* Owners can appoint directors on their record of achievement and business knowledge

* Capital raised from shares never has to be re-paid.

* When a shareholder wishes to leave the company then the shares have to be sold.

Constraints:

* Founder members may lose control

* Setting up may be expensive because of the legal requirements

* Legal documents needed are the Memorandum of Association and the Article of Association. These have to be given to the registrar of companies in order to receive the Certificate of Incorporation, this permits the company to start trading.

The Memorandum of Association governs the company's relationship with the outside world. It includes the company name, the address, what it will produce or what service it will offer, the statement of limited liability for the shareholders, the amount of capital to be raised by selling shares and the agreement of the founder members to form the limited company.

The Articles of Association control the internal running of the company. This includes procedures for the general meeting of the shareholders, the obligations of the directors and the voting rights of the shareholders.

Financial information must be published.

* An annual general meeting of shareholders must be held each year.

* Shares cannot be advertised on the stock exchange (unless the company grows large enough)