Business

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  • Created by: Amyxoxo22
  • Created on: 29-01-20 14:12

Private Limited Company (LTD)

Features:

  • 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)

  • The company is owned by shareholders who invest their own money in the business.

  • These shareholders are usually family and friends. 

  • The shareholders receive dividends (a share of the profit) from the business. 

  • The business is run by a Board of Directors, which in many LTDs is made up of the shareholders

  • To become an LTD the shareholders/directors must complete 2 documents:

    • Memorandum of Association – sets up the company

    • Articles of Association – states how the company is to be run

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:

  • 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)

  • The company is owned by shareholders 

  • Shares can be bought and sold on the stock market

  • There must be at least £50,000 in share capital to become a PLC

  • The shareholders receive dividends (a share of the profit) from the business. 

  • There must

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