Forms of Business Organisations – Vocabulary Flashcards

Forty vocabulary flashcards covering key terms and concepts from the lecture on forms of business organisations.

Business organisation

An enterprise that provides goods and/or services, usually to earn a profit.

Sole trading

A business owned and run by one person who bears all risks and keeps all profits.

Partnership

A business owned by two or more persons who share profits, losses and responsibilities.

Company

An incorporated business owned by shareholders and formed by issuing shares.

Cooperative

A business owned and run jointly by its members who share profits or benefits equally.

Franchise

An enterprise that buys a licence from a franchisor to sell branded products or services.

Companies Act

The legal document that sets out rules and regulations for forming and running a company.

Share

A unit of ownership or capital in a company represented by a voucher or certificate.

Shareholder

An individual or entity that invests in a company by purchasing its shares.

Share certificate

The official document that states the number of shares held by a shareholder.

Dividend

The portion of a company’s profit distributed to shareholders.

Board of Directors

People elected by shareholders to manage and control a company.

Limited liability

Protection whereby shareholders can lose only the amount they invested if the company fails.

Registrar of Companies

The authority that registers companies and issues Certificates of Incorporation.

Memorandum of Association

A legal document stating a company’s name, address, objectives, share capital and shareholders.

Articles of Association

The document detailing a company’s internal rules, directors’ duties and meeting procedures.

Certificate of Incorporation

The legal certificate that allows a company to start operating from a specific date.

Annual General Meeting (AGM)

Yearly meeting where shareholders elect directors and approve the company’s annual report.

Private Limited Company

A company that raises capital from a small number of private shareholders such as friends or relatives.

Public Limited Company

A larger company that raises capital by issuing shares to the general public.

Incorporated business

A legally registered enterprise with a separate legal identity from its owners.

Separate legal identity

Status that allows a company to own property, sue or be sued independently of shareholders.

Continuity

Feature where a company continues to exist even if shareholders leave; shares can be sold on.

Capital (company context)

Money raised for a company, commonly through issuing shares.

Business risk (company)

The chance of financial loss limited to the shareholder’s investment due to limited liability.

Disclosure of accounts

Legal requirement for companies to submit financial statements to authorities and shareholders.

Surplus (cooperative)

The term used for profit in a cooperative, distributed to members as dividends.

Cooperatives Division

Government body that registers cooperatives and issues their Certificate of Registration.

Franchise licence

Legal permission purchased by a franchisee to operate under a franchisor’s brand.

Franchisor

The owner of a brand who sells licences to franchisees.

Franchisee

The buyer of a franchise licence who runs the outlet.

Strong reputation

Advantage of franchising where the franchisee benefits from an established brand and product.

Control by franchisor

Disadvantage of franchising in which the franchisor sets strict rules on pricing and layout.

Huge investment

Large upfront cost of purchasing a franchise licence.

Consultation (cooperative)

Requirement that members discuss and agree before decisions, which can slow action.

Government support (cooperative)

Grants, loans and assistance provided by the state to help cooperatives.

Employment creation

Advantage where cooperative members create jobs for themselves and others.

Application forms (company)

Documents completed by founders and filed with the Registrar of Companies when setting up.

Issue of shares

Process of offering new shares to raise capital for a company.

Voting right

Corporate rule where each share gives its holder one vote in company decisions.