private limited companies (LTD) Flashcards
What is a private limited company?
A private limited company is owned by multiple people and it is small business.
Who owns the business?
The business is owned by shareholders
Number of owners?
There are unlimited number of owners
Who controls the business?
The board of directors control the business
Who finances the business?
The shareholders finance the business
What liability is there?
There is limited liability
Who keeps the profit?
Sometimes the shareholders will keep the profit, other times they
How is the business
established?
Business is registered with the government by creating the memorandum of association and articles of association
Continuity – what happens
if the owner dies?
If the business founders die, the company still exists and whoever owns the shares now continues with the business
Advantages:
Limited liability
Better status in the eyes of some customers
Continues after the death of the founders
Can bring in investors
Disadvantages:
Have to register
Have to disclose information on sales and profits
Have to have accounts independently checked
If there are other investors the original founder is not in full control of the business
What is a memorandum of Association?
It is a form that sets the name of the company, the overall purpose the business, where the company is registered and a general statement of the firms activities.
What is an Article of Association?
It is a form that sets out the voting rights if the shareholders, how profits are distributed, how directors are elected and the duties and powers of the directors.
