Limited Companies
Question 3
Title: Explain the key features of limited companies
A limited company is a business that is owned by its shareholders, run by directors and most importantly the company liability is limited. Limited liability means the investors cannot held personally liable for the company's loses. This encourages people to finance the company, and/or to set up such a business, they know that they can only lose what they put in, if the company fails. For people or businesses who have a claim against the company, “limited liability” means that they can only recover money from the existing assets of the business. They cannot claim the personal assets of the shareholders to recover the amounts owed by the company. To set up as a limited company, a company has to register with the Companies House and is issued with a Certificate of Incorporation. It also needs to have a Memorandum of Association which sets out what the company has been formed, and Articles of Association which are internal rules over including what the directors can do and voting rights goes to the shareholders. Limited companies can either be private limited companies or public limited companies. The differences between the two companies are the Shares in a public limited company (plc..) can be traded on the Stock Exchange and can be bought by the members of the public. Shares in a private limited company are not available to the general public. The issued share capital of a plc. ,must be greater than £50,000 in a plc.. A private limited company may have a smaller share capital. A private limited company might want to become a “plc.” because the shares in a private limited company cannot be offered for sale to the general public, so restricting availability of finance, especially if the business wants to expand. Therefore, it is attractive to change status and it is also easier to raise money through other sources of finance e.g. from banks becoming a “plc.” does not necessarily mean that the company
Title: Explain the key features of limited companies
A limited company is a business that is owned by its shareholders, run by directors and most importantly the company liability is limited. Limited liability means the investors cannot held personally liable for the company's loses. This encourages people to finance the company, and/or to set up such a business, they know that they can only lose what they put in, if the company fails. For people or businesses who have a claim against the company, “limited liability” means that they can only recover money from the existing assets of the business. They cannot claim the personal assets of the shareholders to recover the amounts owed by the company. To set up as a limited company, a company has to register with the Companies House and is issued with a Certificate of Incorporation. It also needs to have a Memorandum of Association which sets out what the company has been formed, and Articles of Association which are internal rules over including what the directors can do and voting rights goes to the shareholders. Limited companies can either be private limited companies or public limited companies. The differences between the two companies are the Shares in a public limited company (plc..) can be traded on the Stock Exchange and can be bought by the members of the public. Shares in a private limited company are not available to the general public. The issued share capital of a plc. ,must be greater than £50,000 in a plc.. A private limited company may have a smaller share capital. A private limited company might want to become a “plc.” because the shares in a private limited company cannot be offered for sale to the general public, so restricting availability of finance, especially if the business wants to expand. Therefore, it is attractive to change status and it is also easier to raise money through other sources of finance e.g. from banks becoming a “plc.” does not necessarily mean that the company