Companies

Question 1

What is a company ?

Answer 1

A company is a organization that has been incorporated that is, the company has a separate legal identity from the owners .

Question 2

Types of companies

Answer 2

Limited liability company and Private limited company.

Question 3

limited liability company

Answer 3

Limited liability company means that the investors or shareholders of a company are not liable for depts incurred by the company beyond the amount they have invested. limited liability companies are either private or public companies.

Question 4

Private limited company

Answer 4

Limited liability company is a company that incorporate business organizations consisting of two to fifty whose aim is to make profits. The membership is restricted to family and friends

Question 5

Formation of a Company

Answer 5

Certain legal requirements must be met before a company can commence trading. Certain documents must be submitted to the companies of Jamaica.

A private limited company must submit to the companies of Jamaica.

1.) Memorandum Of Association
2.) The Articles Of Association
3.)Statement of Authorized , Registered or Nominees Capital.

Question 6

Characteristics of a private limited company:

Answer 6

1.Limited Liability
2.Separate Legal Entity
3. Membership is between 2-50 persons
4. The word ‘‘limited’’ (LTD) must be included

Question 7

Advantages and Disadvantages Of Private limited company

Answer 7

Advantages

1. Limited Liability
   2.Tax Benefits
   3.Access to Capital

Disadvantages of private limited company

1.Limited Access to Capital Markets
2.Regulatory Restrictions
3.Limited Access to Capital Markets

Question 8

Public limited Companies

Answer 8

Public limited Company is also called stock company because a number of persons contributed to its jointly held .

Question 9

Public limited Characteristics

Answer 9

1. There must be at least 7 shareholders with no limit on the maximum number of share holder
2. Shares are traded openly in the stock market
3. The company continues, it does not close down on the death of the shareholder.
4. Greater separation is possible
5. The company obtain capital from its shareholder.

Question 10

Advantages of public limited company

Answer 10

1. Limited Liability

Shareholders’ liability is limited to the amount they have invested in the company. They are not personally responsible for the company’s debts beyond their shareholdings.

2. Share Capital

PLCs can raise capital by issuing shares to the public. This allows them to attract a large number of investors, potentially leading to substantial capital accumulation.

3. It has a separate legal existence.

Therefore, exchanges in shareholders does not affect the continuity of the community.

4. The community is able to grow and obtain economics of sale.

Question 11

Disadvantages of Public Limited Company

Answer 11

1. Regulatory Burden: PLCs face strict regulations and high compliance costs.
2. Loss of Control: Founders may lose control due to share dilution and shareholder influence.

3.Pressure to Perform: There’s pressure to meet short-term goals and market expectations.

4.Transparency Requirements: Required disclosures can expose sensitive information.

5.Market Fluctuations: Stock prices can be volatile, affecting company stability.