Business organizations

Question 1

Alternative director

Answer 1

A person appointed to replace the director when he is unable to attend

Question 2

Types of directors (5)

Answer 2

1. Executive director
2. Non-executive director
3. Chair of the board
4. Alternative director
5. Shadow director

Question 3

Executive director

Answer 3

The individual in charge of the day-to-day running of the company

Question 4

Private company

Answer 4

• it cannot raise money by issuing shares/debentures at large
• No minimum requirement of share capital
• Can have limited liability

Question 5

Sole trader advantages (3)

Answer 5

1. Own boss
2. No specific legal formalities
3. No size limit nor employee limit

Question 6

Sole trader disadvantage

Answer 6

You are personally liable because the company is not a separate legal entity

Question 7

Limited partnership vs. General partnership

Answer 7

A general partnership must have at least two general partners.
A limited partnership must have at least one GP and at least one limited partner.

Question 8

Limited partner

Answer 8

A partner in a company or venture whose liability towards its debts is legally limited to the extent of their investment.

Question 9

General partner

Answer 9

A general partner has responsibility for the actions of the business, can legally bind the business and is personally liable for all the business’s debts and obligations.

Question 10

Public company

–> conditions (3)

Answer 10

• A company that may raise capital through the issuance of shares/debentures
• The company must have a minimum share capital of 45’000 Euros
• The company must have limited liability

Question 11

Chairman of the board

Answer 11

The highest ranking in a firm’s board that might not actually have the executive authority

Question 12

Authorized capital

Answer 12

It is the nominal value of shares that MAY be issued independent of how many HAVE BEEN issued

Question 13

Issued capital

Answer 13

A part of the authorized capital;

The amount that has SO FAR BEEN ISSUED

Question 14

Types of shares (2)

Answer 14

1. Ordinary shares

2. Preference shares

Question 15

Ordinary shares

Answer 15

Dividends depend on the company’s financial position

Question 16

Preference shares

Answer 16

The company has to pay dividends at a fixed rate and pay out before the owners of ordinary shares

Question 17

Management in a Partnership

Answer 17

All partners are entitled to participate

Question 18

Profits in a Partnership

Answer 18

Equal share unless sgreed otherwise

Question 19

Legal status of a Partnership

Answer 19

Not a separate legal entity

Question 20

Taxes in a Partnership

Answer 20

Partners pay income tax dependent on profit division

Question 21

How to Raise capital in a partnership

Answer 21

The partners can borrow but not issue shares/debentures

Question 22

Types of partnerships (3)

Answer 22

1. General partnerships
2. Limited partnerships
3. Limited liability partnerships

Question 23

Types of business structures (2)

Answer 23

1. Unincorporated
   - Sole Trader
   - Partnerships
2. Incorporated
   - Registered company
   - Corporation

Question 24

Non-executive directors

Answer 24

Directors that are not concerned with the everyday running of the company. They are, however, brought in for experience and have more to say

Question 25

Important company registration documents (3)

Answer 25

1. Memorandum of association
2. Registration form
3. Articles of association

Question 26

Registered company (corporation)

• Legal status
• Taxes
• Raise capital
• Profits

Answer 26

• Separate entity
• The company pays a corporation tax
• it may issue shares/debentures to raise capital
• The owners earn money depending on the % ownership