Limited Companies and Multinationals Flashcards

Vocabulary flashcards based on Mr. Haq's lecture on Limited Companies and Multinationals.

Limited Company

An incorporated business with a separate legal identity from its owners.

Incorporated

Having a separate legal identity from its owners.

Limited Liability

The feature of limited companies where owners are not personally responsible for business debts.

Share

A unit of ownership in a limited company.

Shareholder

An owner of shares in a limited company.

Dividend

A payment made to shareholders from company profits.

Directors

Individuals elected by shareholders to run a limited company.

Chairperson

The head of the board of directors in a limited company.

Legal Procedure (for forming a limited company)

The necessary steps to establish a limited company.

Minimum Members (to form a limited company)

Needs a minimum of 2 members.

Memorandum of Association

A document stating the constitution and details about the company.

Articles of Association

A document that deals with the internal running of the company.

Registrar of Companies

The entity to which the Memorandum and Articles of Association must be sent.

Certificate of Incorporation

The document received if the Memorandum and Articles of Association are acceptable.

AGM

Annual General Meeting - a meeting shareholders have a legal right to attend.

Constitution (of a company)

Details set out in the Memorandum of Association.

Registered Office

The official address of the company.

Objectives (of a company)

The aims and nature of a company's activities, stated in the Memorandum of Association.

Capital (of a company)

The amount of money raised by a company through the issue of shares.

Private Limited Company (Ltd)

A company that is a legal entity in its own right, owned by a group of between 2 and 50 shareholders. Cannot sell shares to the public.

Legal Entity

A business that can sue and be sued in its own right.

Shareholders (in a Ltd)

The group of between 2 & 50 people who buy the shares in a private limited company.

Public Limited Company (PLC)

Can sell their shares to members of the public through the stock exchange, with no maximum owner limit.

Stock Exchange

A market where shares of public limited companies are bought and sold.

Prospectus

A document detailing the history of a company and inviting the public to buy shares.

Annual Report

A report compiled each year by a PLC.

Underwriter

Purchases any unsold shares when a company goes public.

Share Capital (minimum for PLC)

A PLC must have a minimum of £50,000 share capital.

Continuity of Existence

An advantage of a PLC, meaning the company continues to exist even if owners change.

High Formation Costs

A disadvantage of a PLC.

Separation of Ownership & Control

A disadvantage of PLCs, where shareholders own the company, but directors make the decisions.

Multinational

A large business with significant production or service operations in two or more countries.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient.

Private Sector

The part of the economy that is run by private individuals or companies, rather than the government. Both LTDs and PLCs operate in the private sector.

Internal Running

How the company is run detailed in the Articles of Association

Medium size business

Sizes of businesses that tend to be private limited companies

Large Size business

Size of businesses that tend to be Public Limited Companies

Raising Capital

Easier to achieve as a Public Limited Company.

Highly Qualified Executives

A feature of Multi National Companies

Experienced Management

A feature of Multi National Companies

Powerful Advertising

A feature of Multi National Companies

Marketing Capability

A feature of Multi National Companies

Advanced Technology

A feature of Multi National Companies

Up-to-date Technology

A feature of Multi National Companies

Economically influential

A feature of Multi National Companies

Politically influential

A feature of Multi National Companies

Host Country

Where the Ownership and control is centured for a Multinational company

Share applications

What a bank are paid to process through Public Limited Companies selling shares

Administration costs

Can be high when forming a Public Limited Company

Legal Right

Shareholders have one to attend the AGM.

Issued Shares

Shares issued through Private investors in private limited companies

Stock Exchange

Shares issued through public members of the public

Authorities

Private Limited company Accounts are available to them.

Anyone

Public Limited company Accounts are available to them.

Shareholders

Profits go to them for both Public and Private Limited companies

Two

Minimum number of Owners for both Public and Private Limited companies

Suing

Something a private limited company is able to do.

Shareholders

They own the private limited company business

7 Shareholders

Amount the business must have when going public

Limited Liability

Advantage of a Public Limited Company

Raising Capital

Easier than Private limited company to raise it.

Published Accounts

Disadvantage of a Public Limited Company

£50,000

Share capital a Public Limited Company must have.