Limited Companies Flashcards
What is a Memorandum of Association?
It governs the company’s relationship with the outside world.
Example: the amount of authorised share capital, where the company is registered, the companies range of activities.
What are Articles of Association?
It governs the internal running of the company.
Example: powers of directors, rights of the shareholders
What are the different types of Limited Companies?
Private Limited Company.
Public Limited Company.
What are the two Documentations required for Limited Companies?
Memorandum of Association
Articles of association
Ltd ?
Private Limited Company
Plc ?
Public Limited Company
Features of a Private Limited Company
- Cannot issue shares to the general public
- Can only sell shares with agreement of other shareholders
- Minimum of one director
(Often a family business)
Features of a Public Limited Company
- Must have a minimum of £50,000 share capital
- Sells shares on stock exchange
- Run by board of directors
Finance for Limited Companies
> Issue of shares - Ordinary / Preference > Bank Loan - (paid back with interest) > Debentures - (form of loan that is issued like shares with fixed interest) > Overdraft > Leasing > Mortgage > Hire Purchase > Factoring > Venture Capital
What is a Limited Company?
An organisation whose capital is contributed by shareholders purchasing shares
Issue of Shares
Shares usually paid for in installments.
Shares can be sold at par (face value) or premium (more than face value)
What is a dividend?
Share of profit received
What are Ordinary Shares?
> Most common type of share.
No fixed rate dividend.
Only receive dividend once everyone else paid
Carry voting rights of the company
What are preference shares?
- fixed rate dividend.
- receive dividends before ordinary shareholders.
- no voting rights
- receive investment back before ordinary share holders
What is a cumulative preference share?
If the dividend is not paid one year, this can be carried to the next year and paid then.
