Studied by 3 peoplelimited companies
incorporated companies with a separate legal identity from their owners
features of limited companies
owners have limited liability
business raises capital by selling shares
shareholders elect directors to run the company
pay corporation tax on profit
legal procedure must be followed
minimum number of members required for limited companies
2
documents needed to form a limited company
memorandum of association
articles of association
who must the documents needed to form a limited company be sent to
registrar of companies
if the documents needed to form a limited company are accepted then what will the partners get
certificate of incorporation allowing it to trade as a limited company
memorandum of association
sets out constitution and gives details about the company
articles of association
deals with the internal running of the country
are private limited companies small or large
most are small or medium sized, but a small minority is large
features of private limited companies
name ends in limited or ltd.
shares can only be transferred ‘privately’
shares cannot be traded on the stock market
often family businesses
directors tend to be shareholders
private limited companies - advantages
shareholders have limited liability
more capital raised
no loss of control to outsiders
business continues even if shareholder dies
has more status
private limited companies - disadvantages
financial information has to be made public
costs money
takes time to set up
shared profit
takes time to transfer shares
cannot raise huge amounts of money
features of public limited companies
larger than private limited companies
shares can be bought and sold by public on stock exchange
anyone can buy shares
why are public limited companies expensive
company needs lawyers
prospectus has to be printed and circulated
bank needs to process applications
company has to insure against possibility of unsold shares
advertising and administrative expenses
must have a minimum 50000 share capital
public limited companies - advantages
large capital raised
shareholders have limited liability
exploit economies of scale
may be able to dominate the market
shares bought and sold easily
high profile
public limited companies - disadvantages
expensive set up costs
outsiders can take control by buying shares
financial information has to be made public
remote to customers
regulatory control owing to company acts
managers take control
prospectus
a document advertising the company to potential investors
multinational company
large businesses with significant production or service operation in a minimum of 2 countries
features of multinational companies
huge assets and turnover
highly qualified and experienced professional executives
powerful advertising and marketing
advanced and up to date technology
highly influential
efficient - exploit economies of scale
ownership and control is centred in host countries
small businesses
private limited companies
family businesses
shared ownership
large businesses
public limited companies
multinationals
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