Business Notes

• Companies Act


  A legal document that outlines the laws and regulations to set up a company
• Share


  A voucher that represents a unit of capital
• Shareholder


  One who invests in a company by buying its shares
• Share certificate


  An official document stating the number of shares that the shareholders have in the company
• Dividend


  The part of company's profits that is distributed to shareholders
• Board of Directors


  Those who have been elected by shareholders to manage the company
• Limited liability


  Shareholders will lose only the initial amount invested in case the company goes bankrupt
• Registrar of Companies


  The authority that registers companies and issues the certificate of incorporation to allow the business to start its operation
• Memorandum of Association


  A legal document which provides details such as company's name, physical address of registered office, names of shareholders and the distribution of shares
• Articles of Association


  A document that specifies the internal rules of a company
• Certificate of Incorporation


  A legal document showing the official date a company can start operating
• Annual General Meeting (AGM)


  A yearly meeting where shareholders elect the directors of a company and the annual report about the performance of business is presented and approved
• Types of company


  • Private Limited Company
  • Public Limited Company
• Steps for registration of a company

  1. Application forms

  2. Registration

  3. Certificate of Incorporation
• Private Limited Company


  • A business that raises capital from a small number of shareholders such friends and/or relatives
• Public Limited Company


  • A business that raises capital by issuing shares to members of the general public. It is usually larger than a private limited company
• Company


  • Must be incorporated at the Registrar of Companies, has a separate legal identity from the owners, shareholders are the owners, managed by a Board of Directors, shareholders have limited liability, profits are distributed as dividend
• Cooperative


  A business organisation which is owned and run jointly by its members, who share the profits or benefits
• Setting up a cooperative

  1. Application to the Cooperatives Division

  2. Registration

  3. Certificate of Registration
• Features of a cooperative

  • Must be registered, Owners are members who buy shares, Each member has one voting right, Members have limited liability, Gains are shared as dividend
• Franchise


  An enterprise that has a license from a franchisor to sell its products or services
• Features of a franchise


  • Franchisee buys a license of operation from the franchisor, Franchisee runs and controls the enterprise
• Entrepreneur


  An individual who sets up an enterprise by taking risks and who aims at making profit
• Functions of an entrepreneur

  • Planning
  • Organising
  • Staffing
  • Leading
  • Controlling
• Responsibilities of an entrepreneur

  • Keep accounting records
  • Recruit and train workers
  • Promote the products
  • Order raw materials or goods for resale
  • Look after the finance of the enterprise
  • Handle customers
• Qualities of an entrepreneur

  • Innovative
  • Skilful
  • Intelligent
  • Risk taker
  • Self-confident
  • Passionate
• Stakeholders


  People, groups or organisations that take interest in activities and decisions taken by a business
• Stakeholders, their roles and objectives

  • Owners - Set up enterprise
  • Managers - Organise and run the business
• Qualities of a leader entrepreneur


  • Skilful
  • Intelligent
  • Risk taker
  • Self-confident
  • Passionate
• Stakeholders


  • Owners
  • Managers
  • Employees
  • Suppliers
  • Consumers
  • Government
  • Community/Society
• Roles of stakeholders


  Owners set up enterprise<|>Managers organise and run the business<|>Employees are the workers and they spend significant time in the organisation<|>Suppliers provide raw materials and other input to the enterprise<|>Consumers are the buyers of the goods and services that the enterprise provides on the market<|>Government regulates and monitors the running of businesses<|>The society includes people or groups who are directly or indirectly influenced by the activities of the enterprise
• Objectives of stakeholders


  To maximise profits<|>To expand the business<|>To drive the enterprise to success<|>To earn high salaries<|>To have a secured job<|>To earn a fair pay (wages and salaries)<|>To ensure their jobs are secured<|>To have a timely payment for goods supplied to the enterprise<|>To ensure safe, reliable and value for money products<|>To ensure that jobs are created<|>To ensure that the enterprise abides by laws<|>To ensure that the activities of the enterprises do not harm the society
• Business risk


  Any factor that represents a threat to an enterprise's ability to achieve its goals
• Types of risk


  • Strategic risks
  • Operational risks
  • Financial risks
  • Compliance risks
• Steps of risk management

  1. Identify potential risk(s)

  2. Assess the impact of loss

  3. Develop a plan to mitigate the risk(s)

  4. Implement the plan

  5. Review and evaluate the plan
• Communication process


  The flow of information from the sender (the transmitter) to the receiver (the recipient)
• Features of the communication process

  • Sender
  • Message
  • Medium of communication
  • Receiver
  • Feedback
• Effective communication is a two-way process between the sender and the receiver, where a feedback is provided
• Causes of ineffective communication

  • Language
  • Medium
  • Technical problems
  • Distractions
• Importance of effective communication in an enterprise

  Leads to orders placed on time (Supplier)<|>Employees know about job expectations<|>The enterprise is able to meet customers' orders on time<|>It leads to quicker decisions taken by the entrepreneur