Corporations

Question 1

Define private limited companies

Answer 1

This is a company whose liability is limited to the number of shares issued

Question 2

Define Public limited companies

Answer 2

A company that is managed by directors and owned by shareholders.Shares can be bought freely by anyone on the stock exchange

Question 3

Advantages of a private limited company

Answer 3

> Limited liabilty for shareholders
Continuation- Unlike a partnership the business will not end if a shareholder dies
Easier to raise capital

Question 4

Disadvantages

Answer 4

> Double taxation- Taxation on icome tax and dividends
Higher start up costs
Legal requirements- Corporations are subject to more legal and fincial requirements compared to other forms of business

Question 5

Define a Non Profit Corporation/Organisation

Answer 5

An organisation whose goal is to serve a positive purpose to the community rather than profit generation

Question 6

Advantages of Non Profit Corporations

Answer 6

> Tax exemption-NGO’s registered under IBR do not pay any tax
Limited liability- Creditors and courts are limited to the assets of the corporation
Eligibilty for various grants - NGO’s may request donations from the public

Question 7

Disadvantages of NGO’s

Answer 7

> All profits go back into the organisation
The time, cost & effort used to establish a non profit organiztaion are demanding
The public is able to to obtain copies of its finances for review and inspection