Business
- Created by: Amyxoxo22
- Created on: 29-01-20 14:12
Private Limited Company (LTD)
Features:
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The business has a separate legal entity from its owners (it can own property in the name of the company; it can sue and be sued)
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The company is owned by shareholders who invest their own money in the business.
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These shareholders are usually family and friends.
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The shareholders receive dividends (a share of the profit) from the business.
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The business is run by a Board of Directors, which in many LTDs is made up of the shareholders
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To become an LTD the shareholders/directors must complete 2 documents:
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Memorandum of Association – sets up the company
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Articles of Association – states how the company is to be run
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Benefits
Drawbacks
Limited liability
Any new shareholders must be agreed with all other shareholders, so future sources of finance through shares can be difficult to raise
Shared responsibility
Decision-making amongst all shareholders (as directors) can take a long time
Financial information stays private
Public Limited Company (PLC)
Eg. M&S, Tesco, British Telecom. Features:
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The business has a separate legal entity from its owners (it can own property in the name of the company; it can sue and be sued)
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The company is owned by shareholders
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Shares can be bought and sold on the stock market
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There must be at least £50,000 in share capital to become a PLC
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The shareholders receive dividends (a share of the profit) from the business.
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There must…
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