PRIVATE LIMITED COMPANY (Ltd.

Definition Organisation owned by a group of individuals

Memorandum of Association & Articles of Association
Ownership Shareholders (usually family)
Finance & Profit Bulk of money is raised by issuing shares or borrowing
Ordinary Shares
Preference Shares
Profit shared between shareholders or retained by company
Control Shareholders main function is to elect Board of Directors
+ -
• More capital • Shares not easily transferred
• Limited liability (all must agree)
• Owner can retain control • Limited growth
• Company does not die if owners • Accounts not private
die • A lot of administration work
required

Definitions

Memorandum of Association – name, address, objectives, liability of members,

capital raised, number of shares

Articles of Association – rights of shareholders, procedures for appointing

directors an duties, term of directorship, arrangements for meetings and
auditors

Shareholder – a part-owner in a company

Auditors – independents who check administration and accounts are a true and
fair reflection of company

Ordinary Shares – vote at meeting, share of profit

Preference Shares – no voting rites, but fixed % return if profit has been made
and before any return to Ordinary shareholders

AGM – Annual General Meeting

Examples

Arnold Clark
Baxters
PUBLIC LIMITED COMPANY (plc)

Definition Organisation owned by a group of individuals, has plc after

name
Memo/Artic. Of Assoc. approved by Registrar of Companies
before Certificate of Incorporation.
Ownership Shareholders 2+. Shares sold on stock exchange. Prospectus
prepared to attract shareholders
Finance & Profit Capital raised by issuing shares or borrowing
Ordinary Shares
Preference Shares
Profits shared between shareholders or retained by company
Control Board of Directors
Divorce of ownership and control
+ -
• More capital • Formation expensive
• Employ specialists • Must publish accounts
• Limited liability • May become too large to
• Company does not die if owners manage effectively
die • Decisions more difficult to
• Shares can be issued through arrive at
stock exchange

Definitions
Registrar of Companies – based at Companies House keeps a record of all
Limited Companies trading in the UK

Certificate of Incorporation – document issued when all aspects of the

Company Act (1985) has been met

Stock Exchange - A market for the sale and purchase of second hand shares
and securities.

Share Capital – money raised through ordinary or preference shares

Dividend – shareholders share of the profits

Prospectus - A brochure inviting the public to buy shares before flotation