MULTI. & LIMITED COMPANIES

• What is a venture capitalist?

  specialist investors (individuals or companies) who provide money for business purposes, often to new businesses
• What does it mean to sue someone?

  to make a legal claim against someone, especially for money, because they have harmed you in some way
• What is a limited company?

  a business organisation that has a separate legal identity from its owners
• What is a chairperson?

  someone who is in charge of a meeting or directs the work of a committee or organisation
• What is a certificate of incorporation?

  a document needed before a new company can start doing business
• What are the main features of a limited company?

  • owners have limited liability
  • business raises capital by selling shares
  • shareholders elect directors to run the company
  • companies pay corporation tax instead of income tax
• What is the legal procedure to form a limited company?

  • must have a minimum of two members, no maximum limit
  • Before it is formed, memorandum of association and articles of association documents must be sent to the registrar of companies
  • if documents are accepted, the company will get a certificate of incorporation
• What does the memorandum of association do?

  sets out the rules and gives details about the company
• What does the articles of association do?

  deals with the internal running of the company
• What details does the memorandum of association provide?

  • name of the company
  • name and address of companies registered office
  • companies objectives and the nature of its activities
  • amount of capital to be raised and number of shares to be issued
• What details does the articles of association provide?

  • the rights of shareholders depending on the type of share they hold
  • procedures for appointing directors
  • length of time directors should serve before re-election
  • timing and frequency of company meetings
  • arrangements for auditing company accounts
• What are the two documents needed when forming a limited company?

  • memorandum of association
  • articles of association
• What are some features of a private limited company?

  • the business name ends in "limited" or "ltd"
  • shares can only be transferred privately
  • often family businesses or close friends
  • directors tend to be shareholders and are involved in the running of the business
• What is a private limited company?

  a company limited by shares, ownership is restricted to a select group of shareholders and the shares are not available to the public
• What are the advantages of a private limited company?

  • shareholders have limited liability
  • more capital can be raised
  • control cannot be lost to outsiders
  • has more status then - for example a sole trader
• What are the disadvantages of a private limited company?

  • financial information has to be made public
  • expensive and takes time to set up
  • profits are shared between members
  • takes time to transfer shares to new owner
  • cannot raise huge amounts of money like PLCs can
• What is the stock market?

  a market for shares in public limited companies (PLCs)
• What is a public limited company (PLC) ?

  a limited company who's shares are sold and traded, with a minimum share capital of £50 000. Their shares can be bought and sold by the public on the stock exchange
• What does it mean for a company to 'go public' ?

  when a private limited company decides to turn public meaning that anyone can buy their shares
• Why can 'going public' be expensive?

  • the company needs lawyers to ensure the prospectus is legally correct
  • PLC must have a minimum of £50,000 share capital
  • advertising and administrative expenses
  • a fee is paid to an underwriter who must buy any unsold shares
• What is a prospectus?

  a document produced by a company that wants the public to buy its shares
• What is regulatory control?

  official power to control and activity and to make sure that it is done in a satisfactory way
• What is flotation?

  the process of a company 'going public'
• What are the advantages of a public limited company?

  • large amounts of capital can be raised
  • shareholders have limited liability
  • PLCs can explore economies of scale
  • may be able to dominate the market
  • shares can be bought and sold easily
  • may have a very high profile in the media
• What are the disadvantages of a public limited company?

  • setting up costs are expensive
  • outsiders can take control by buying shares
  • more financial information has to be made public
  • managers may take more control than owners
• What is a multinational company?

  a large business with locations in at least two different countries
• What are the features of a multinational company?

  • huge assets (land, buildings, plant, machinery and money and turnover)
  • highly qualified and experienced professional executives and managers
  • powerful marketing and advertising
  • advanced and up-to-date technology
  • influential economically and politically
  • ownership and control centred in host country