Companies Flashcards
Can you have a public unlimited company?
No
Why is there no such thing as a public unlimited company?
There are no public unlimited liability companies because public companies typically offer shares to the public, and the concept of unlimited liability would be extremely risky and unattractive for investors
Is there such thing as a public company without a share capital?
No
Why is there no such thing as a public company without a share capital?
There is no such thing as a public company without the company would need shares to sell to the public
Why do some companies say ltd or limited at the end of them?
To show that they are a private limited company
Private Limited Companies are either limited by ….. or ……
shares or guarantee
What does it mean if a company is limited by shares?|
It means that the liability of its members will be limited to the amount that is unpaid on their shares
- The members can agree in the AAs whether those shares can remain unpaid or whether they must be paid up.
The aggregate of the shares will form the …
share capital
What if a member has already fully paid up their shares?
Then they effectively have no liability - as there is nothing left unpaid on the nominal value of their shares.
If a company is wound up and a member’s shares is partly unpaid, what must they do?
They must pay the difference between the nominal value of their shares and the amount that they had already paid.
What does it mean if a company is limited by guarantee?
It means that the liability of its members/guarantors is limited to a specific amount that they agree to contribute if the company is wound up
- This amount is set out in a Statement of Guarantee.
NOTE: These companies are rare and have no share capital.
What is a private limited company?
A private limited company is a company that is privately held among one or more members whose liability is limited.
- most companies are private limited companies.
What are private unlimited companies?
Private unlimited companies are privately held among one or more members whose liability is unlimited.
- They are rare as most companies become incorporated so as to benefit from limited liability.
What happens upon the winding up on an unlimited company?
The liability of the company’s members is personal and unlimited.
What is the 1 advantage of unlimited companies?
They are subject to less regulation than limited companies as they do not need to file their accounts at CH (which makes the accounts public).
- This provides more privacy for the members.
What is a public company?
A public company is a company that can offer to sell its shares to the public
What are the main differences between a private company and a public company?
- A private company cannot sell its shares to the public.
- Public companies have more regulation, and can later become listed companies.
- The liability of public companies is always limited but not always for private companies.
What is a major similarity between public and private companies?
They both have share capital.
Why do some companies say Plc or plc at the end of them?
To show that they are a public limited company
What is a listed company?
A listed company is a company which is listed on the Official List/stock market (i.e. London Stock Exchange).
- Its shares may be bought and sold there by members of the public.
What is the Official List?
The Official List is the Financial Conduct Authority’s list of shares which are allowed to trade on regulated markets in the UK
Do all plc’s list their shares?
No
- generally, a long period elapses between the incorporation of a plc and the IPO and the listing of its shares.
Why is an IPO desirable for a plc?
It gives the company an opportunity to raise equity finance.
Why does it take years to get to an IPO?
It takes years as:
1- Investors will want to see first that a company is stable with a successful commercial track record.
2- The company needs to comply with a raft of regulatory requirements before it can list.
