Companies Flashcards
What is the definition of limited liability?
This is when the responsibility for the debts of the company is limited to the amount that the shareholder has put in.
What is a private limited company
Shareholders are known of invited (LTD)
What is a public limited company
Shareholders are members of the public and the shares are bought on the stock market
What is the definition of shares?
A unit of ownership in a limited company
What is the definition of shareholders
The owner of a private or public limited company
Advantages of private limited companies
Limited liability protects the personal wealth of the shareholders
Easier to raise finance as they can sell shares
Continuity. The company continues to exist even when shareholders change.
Original owners are likely to retain control
Disadvantages of private limited companies
Shareholders have to agree about how dividends are distributed
Greater administrative costs than setting up as a sole trader or partnership
Finance limited to friends and family
Less privacy. Public disclosure of financial information.
Advantages of public, limited companies
Limited liability protects the personal wealth of shareholders
Can raise large sums of capital via the stock exchange
Continuity. Business continues to exist even when shareholders change
Borrowing money from the bank will be easier because they will be seen as less of a risk
Disadvantages of public, limited companies
Greater costs to set up and operates than a LTD. A PLC must have £50,000 of shares as a minimum.
The public can see company, information and accounts
Risk of company being taken over
What is aim and objectives
Profit
Increase market share
Growth
Survival
Service
Why do business have different objectives
The type of ownership
Type of business
The age of the business
Level of competition
