1.4 Flashcards
What is a limited company?
Limited companies are incorporated this means that they have a separate legal identity from their owners.
what is the minimum amount of members for a limited company
A limited company minimum amount of members must be 2 but there is no upper limit.
What are some characteristics of a limited company?
○ The owners have limited liability.
○ The business raises capital by selling shares. Each shareholder owns
a number of these shares.
○ Shareholders are entitled to vote on important matters such as who
will run the company and get paid from profits. Those with more
shares will have more control and receive more money from the
company.
More info about limited companies.
Some important documents must be sent to the Registrar of Companies
before a limited company can be formed. The two most important ones
are:
○ Memorandum of Association
○ Articles of Association
● If these two documents are authorised and accepted, the company will
get a certificate of incorporation. This allows it to trade as a limited
company.
Memorandum of Association
● The following aspects must be included:
○ Name of the company
○ Name and address of the company’s registered office
○ Objectives of thee company and the nature of its activities
○ Amount of capital to be raised
○ Number of shares to be issued
Articles of Association
● The following aspects must be included:
○ Rights of shareholders (depending on the type of shares they hold)
○ Procedures for appointing company directors
○ Length of time directors should serve before re-election
○ Timing and frequency of company meetings
○ Arrangements for auditing company accounts
difference between private and public limited companies.
Huawei - Privates shares cannot be traded on the stock market.
Shares can only be traded privately
Apple - public shares can be bought and sold by the public at the stock exchange.
Info about private limited companies.
● Shares can only be transferred from one individual to another. All
shareholders must agree on the transfer of shares.
● Shares cannot be advertised for sale.
● Cannot trade on the stock market.
● The directors of these companies tend to be shareholders and tend to be
involved in the running of the business.
Advantages of a private limited company
shareholders have limited liability
more capital can be raised
control cannot be lost to outsiders
business continues if a shareholder passes away.
disadvantages of a private limited company.
Financial information has to be made public
costs money and takes time to set up
profits are shared between more members
takes time to transfer shares to new owners.
characteristics of public limited companies.
tend to be larger than private limited companies.
their shares can be bought and sold by the public on the stock exchange.
Advantages of a public limited company
Large amounts of capital can be raised.
Shareholders have limited liability.
May be able to dominate the market.
Shares can be bought and sold very easily.
disadvantages of a public limited company
Setting up costs can be very expensive.
More regulatory control owing to Company acts
More financial information has to be made
public.
what makes multinationals
A large business with significant production or service operations in at
least two different countries.
what are some characteristics of multinationals?
Some key characteristics of multinationals are:
○ Huge assets (land, buildings, plant, machinery, money and turnover)
○ Highly qualified and experienced professional executives and
managers
○ Powerful advertising and marketing capabilities
○ Highly advanced and up-to-date technology
○ Highly influential (economically and politically)
○ They can exploit economies of scale
○ Ownership and control is centered in the host country
Multinational organizations advantages
Large amounts of capital can be raised.
Shareholders have limited liability.
May be able to dominate the market.
Shares can be bought and sold very easily.
multinational organizations disadvantages
Setting up costs can be very expensive.
More regulatory control owing to Company acts.
More financial information has to be made public.
Takes time to transfer shares to new owners.
