CHAPTER 4: LIMITED LIABILITY

LIMITED COMPANIES: a limited company is a business that is owned by its SHAREHOLDERS who have bought shared from he company, RUN BY DIRECTORS and has a SEPARATE LEGAL IDENTITY from its owner.

Main features of limited companies

separate legal identity
the owners have limited liability
capital is raised by selling shares
they are run by directors elected by the shareholders
companies pay corporation tax
to form a limited company its necessary follow a legal procedure

STEPS TO FORM A LIMITED COMPANY:

register with REGISTRAR OF COMPANIES at companies house
Draw up a MEMORANDUM F ASSOCIATION
Draw up the ARTICLES OF ASSOCIATION
Obtain a certificate of incorporation from the companies' registrar
the company can then start trading

PRIVATE LIMITED COMPANIES- LTD

denoted by limited, ltd or pty ltd
shares transferred privately
all shareholders must agree on the transfer , cannot be advertised for sale
shared cannot be traded on stock market
owned by family members and friends
directors tend to be shareholders

PUBLIC LIMITED COMPANIES- PLC

VERY LARGE BUSINESSES
PRIVATE SECTOR
DENOTED BY PLC, plc
MINIMUM IF $50,000 SHARE CAPITAL
POSSIBILITY OF SOME SHARES REMAINING UNSOLD
ADVERTISING AND ADMINISTRATIVE EXPENSES
SHARES BOUGHT AND SOLD BY THE PUBLIC ON THE STOCK EXCHANGE

ADV.

LTD - limited liability

sales of shares
separate legal identity
original owner retains control
ore ability to raise capital
continuity
has more status

PLC- limited liability

incorporated business
separate legal identity c
continuity
raise large amount of capital
very high profile in the media
easy to attract suppliers

DISADV.

LTD

financial info. has to be made public
cost money ant time to set up
profits are shared
takes time to transfer shares to new owner
cannot raise huge amounts of money like plcs

PLC

setting up costs can be very expensive
outsiders can take control buying shares
more financial information has to be made public
may be more remote from customers
more regulatory control due to company acts
managers may take control rather than owners

DIFFERENCES BETWEEN AN LTD AND A PLC

PUBLIC LIMITED COMPANY (PLC)

the shares are offered to the general public on the stock exchange, meaning anyone an be a shareholder in the company
if something goes wrong it could have an adverse effect on the public
shares can be transferred freely

PRIVATE LIMITED COMPANY (LTD)

the shares are not offered for sale to the general public,usually just family or friends
probably wouldn't have an adverse effect
usually sold o family or friends and can only be done if all shareholders agree.

JOINT VENTURES

two or more business
work closely together
one project

ADV.

shared risks
reduced costs
shared research and development costs
most are friendly. may help to improve the success of the venture
competition may be eliminated

DISADV.

policy and management

disagreements

conflicts

disputes

profit is split between the investors

reduces profit potential

	Created by S bint A. over 6 years ago

This is some notes i did it is only on 14 chapters. I will try getting done the next chapters. Hope it is helpful!.

Business Revision