In a limited company, shareholders are personally liable for the company's debts.
False
A limited company is legally distinct from its shareholders, allowing it to own property and enter into contracts
Order the advantages and disadvantages of private and public limited companies:
1️⃣ Private Limited Company: Simpler structure
2️⃣ Private Limited Company: Limited capital raising
3️⃣ Public Limited Company: Access to large capital
4️⃣ Public Limited Company: Complex regulatory requirements
The minimum capital requirement for a public limited company in the UK is typically £50,000.
True
Professional managers ensure efficient decision-making in limited companies.
True
What is a core feature of limited companies regarding ownership and management?
Separation of ownership and management
Accountability in limited companies improves transparency through clear lines of responsibility.
True
In a limited company, the liability of shareholders is limited to the amount they have invested
Match the feature of a limited company with its description:
Limited Liability ↔️ Shareholders are responsible only up to their investment
Separate Legal Entity ↔️ The company is legally distinct from its owners
Perpetual Succession ↔️ The company continues regardless of ownership changes
Perpetual succession ensures a limited company continues to exist even if shareholders change.
True
What is the typical minimum capital requirement for a private limited company?
£1
Order the steps involved in raising equity finance for a limited company.
1️⃣ Sell shares to investors
2️⃣ Initial public offering (IPO) or new shares
3️⃣ Increase capital
4️⃣ Potential higher returns
Equity finance dilutes ownership in a limited company.
True
The loss of privacy is a disadvantage of the limited company structure, as certain company information must be publicly disclosed.
True
A limited company is a business organization where the liability of shareholders is limited to the amount they have invested
Match the key features of a limited company with their descriptions:
Limited Liability ↔️ Shareholders are liable only for their investment
Separate Legal Entity ↔️ The company is distinct from its shareholders
Transferable Shares ↔️ Shares can be bought and sold
Perpetual Succession ↔️ The company continues even if shareholders change
Shareholders in a limited company are personally responsible for the company's financial obligations.
False
Shares in a public limited company are traded on a stock exchange
The separation of ownership and management in a limited company allows shareholders to focus on investment returns while managers oversee daily operations
In a limited company, the liability of shareholders is limited to the amount they have invested
Managers in a limited company ensure efficient and strategic decision-making due to their expertise
In a large corporation, who oversees daily operations?
CEO and board of directors
What does it mean for a limited company to be a separate legal entity?
Legally distinct from owners
What is a key aspect of the legal structure of a limited company regarding liability?
Limited liability
Private limited companies have shares that are not traded publicly
The separation of ownership and management allows professional managers to use their expertise in running the company.
True
What are common forms of debt finance for limited companies?
Loans, bonds, debentures
Tax-deductible interest payments are an advantage of debt finance
Match the financing option with its characteristic:
Equity Finance ↔️ Dilutes ownership
Debt Finance ↔️ No dilution of ownership
What is a key disadvantage of the limited company structure regarding taxation?