private and public limited companies

Question 1

what are companies

Answer 1

is an incorporated entity that is owned by persons and entities who invested in the company by buying its shares.

Question 2

what are corporations

Answer 2

a business which has been incorporated and given a separate and distinct identity from that of its owners; as a result, its owners enjoy limited liability.

Question 3

who are shareholders

Answer 3

these are people and entities who become owners of a company by buying its shares.

Question 4

two documents needed needed for a limited liability company

Answer 4

articles of association and memorandum of association

Question 5

what is articles of association

Answer 5

a document that is created before a business is incorporated. It lays down the rules that govern the internal running of the business and contains information such as the rights and obligations of directors.

Question 6

what information does the articles of association contain

Answer 6

• the procedures for calling annual general meetings where shareholders meet to hear how the company is preforming
• the rights and obligations of directors
• the election of directors

Question 7

what is the memorandum of association

Answer 7

a document that is created before a business is incorporated. It gives information about the company and governs its relationship with the outside world. It contains the name and address of the company as well as the share capital of the company.

Question 8

what does the memorandum of association contain

Answer 8

• the company’s name, which must end with the word ‘limited’.
• the address of the company’s registered office.
• the objectives of the company and the scope of its activities so that prospective shareholders know what the are investing in.
• the amount of money to be raised by selling shares.