Limited Liability Companies

Question 1

Shares can be any … Per share

Answer 1

Amount

Question 2

Shares can be issued at

Answer 2

(i) Nominal value/par value/ face value
A share is issued at nominal value (N$1 shares sold for N$1)
(ii) Share premium
Nominal value plus premium (N$1 shares are issued at N$1,50)

Question 3

Name the two types of companies and explain the difference between them.

Answer 3

Public limited eg. ABC LTD
-listed on the stoch exchange
Private company eg. ABC(PTY)LTD
-issued privately

Question 4

Explain the differet kinds of share capital

Answer 4

Authorised share capital (100 000)

• Issued share capital(70 000). -Unissued share capital(30 000)
• Ordinary shares
• Preference shares
• Cumulative
• Non-cumulative
• Participating
• Redeemable

Question 5

The capital of a limited company is divided into

Answer 5

Shares

Question 6

Name the most important reason for forming a limited company

Answer 6

To achieve large amount of capital

Question 7

Each company is governed by two documents. Explain.

Answer 7

Main documents:
*Memorandum of association
(Name, capital, objects, registered office, liability of owners)
*Articles of association
(Daily running, rights of memberd, powers of directors, voting procedures)

Question 8

A limited company has a

Answer 8

Seperate legal entity

Question 9

Explain the term: Share capital

Answer 9

The amount of money put into a company by its shareholders when they buy shares.
Capital structure
Authorised share capital (100 000)
- Issued share capital(70 000). -Unissued share capital(30 000)
*Called up (klaar gekoop-40 000).
1)Paid up capital (klaar betaal)
2)Calls in arrears (gekoop maar nie betaal)
*Uncalled (nog nie gekoop-30 000)

Question 12

What does limited liability mean for a shareholder of a company

Answer 12

Limited liability: shareholders capital is limited to the shares they have bought in a company

Question 13

Explain the difference between published accounts and intenal accounts.

Answer 13

Published accounts: financial statements made available to the general public
Internal accounts: All accounts and statements prepared by the internal accountants and are kept inside the companies for use of the managers

Question 14

Name the different types of preference shares

Answer 14

Cumulative
Non-cumulative
Participating
Redeemable

Question 15

Explain the preference share: cumulative

Answer 15

If a company is unable to pay dividend in a particular year, arrears are allowed to accumulate amd be paid in the future. Received a fixed rate of dividend

Question 16

What is a prospectus

Answer 16

It is a printed document describing the main features of a commercial enterprise offering anybody the change to take up shares in the company.

Question 17

Where do public limited companies deal with their shares

Answer 17

Stock exchange

Question 18

What are quoted companies

Answer 18

Companies that are listed on the stock exchange

Question 19

How are companies run/managed

Answer 19

On the AGM a board of directors will be selected. They will appoint the managerd that are responsible for the day to day running of the business

Question 20

Explain AGM

Answer 20

Annual general meeting

Question 21

Explain shares

Answer 21

The division of the capital of a limited comany into shares

Question 22

Explain directors remuneration (fees)

Answer 22

The money a director receives for the service he/she provides-normal expense

Question 23

Explain reserves

Answer 23

The transfer of apportioned profits to accounts for use in future years

Question 24

Explain debentures

Answer 24

Jkvsfd

Question 25

Explain dividends

Answer 25

The amount given to shareholders as their share of the profits of a company.

Question 26

Explain market value

Answer 26

Price of the shares that are sold on the stock exchange

Question 27

Framework for the appropriation account

Answer 27

Net profit before tax
Less tax
Net profit after tax
Add retained profit
XXX
Less: Transfer to general reserve
Dividends: Preference 
                    Ordinary
Retained Profit

Question 28

Explain the preference share: Non-cumulative

Answer 28

If a company cannot pay dividend in a particulat year, arrears are not allowed to accumulate, wil not be paid in future. Receive a fixed rate of dividend

Question 29

Explain the preference share: Participating

Answer 29

May participate in profit available for distribution afterother shareholders have received a stated percentage.

Question 30

Explain the preference share: Redeemable

Answer 30

Will state a redeemable date useful if company wants additional capital for period. Received a fixed rate of dividend. These are often issued to finance a particular project for a set time or when company has too much capital for requirements, it can be returned to the redeemable preference shareholders.