Business Legal Structures Flashcards
Certificate of Incorporation
A legal document relating to the formation of a company or corporation
Articles of Association
A document that specifies the regulations for a company’s operations
Dividends
A percentage of the profits of a business which is paid to shareholders as a reward for their investment
Divorce of ownership and control
The division between those who own the company (shareholders) and those who run it (managers) can result in decision making being taken which are not in the best interest of the owner
Incorporation
The process of legally declaring a business as a separate entity from the owners. Owners of incorporated companies have limited liability
Limited Company
A form of company ownership in which the owners have limited liability
Limited liability
An investor’s financial commitment is limited to the total amount invested in a business
Memorandum of Association
A document that regulates a company’s external activities and must be drawn up on the formation of a registered or incorporated company
Nationalised Industry
A business which is deemed nationally important and is therefore owned by the government
Not-for-profit
Businesses with a motive other than profit, this may be to provide a social benefit or service to society or to support a cause
Partnership
Two or more people joined together to form a business which is unincorporated. Each partner therefore has unlimited liability
Public Corporation
An organisation which has been created to perform a governmental function or to operate under government control, such as a hospital
Sole Trader
An individual who owns and runs their own business, their liability is limited to the sum invested
