Business Chapter 3

sole trader

a business owned and controlled by one person

partnership

is formed when two or more people agree to jointly own a business

partnership agreement

the written and legal agreement between business partners. it is not essential for partners to have such an agreement, but it is always recomended

unincorporated business

one that does not have a seperate legal identity to the owners of the business

unlimited liability

the owners of a business can be held responsible for the debts of the business they own. their liability is not limited to the investment they made in the business

limited liability

the liability of shareholders in a company is limited to only the amount of money invested

incorporated business

are companies that have seperate legal identity from their owners

shareholders

are the owners of a limited company. they buy shares which reperesent part-ownership of the company

private limited companies

businesses owned by shareholders but they cannot share to the public—only to family, friends or specialist business investors

public limited companies

businesses owned by shareholders but, unlike private limited companies, they can sell shares to the public. Their shares are traded on stock exchanges

annual general meeting (AGM)

is a legal requirement for all public limited companies. shareholders may attend and bot on who they want to be on the Board of Directors for the coming year

dividends

payments made to shareholders from the profits of a company. they are the return to shareholders for investing in the company

franchise

a business based upon the use of the brand name, promotional logo and product ideas of an existing successful business

franchisor

the original business that sells the right to a franchisee to use its name and idea. the franchisor sells the right to open stores and sell products or services using its brand name

franchisee

buys the licence to operate an outlet of an existing business from the franchisor

joint venture

where two or more businesses start a new project together, sharing capital, risks and profits

social enterprise

social objectives as well as an aim to make a profit to reinvest back into the business

memorandum of association

contains important information about the company and dictators

articles of association

rules and regulations under which company will be managed