RE-CAP

What is a partnership?

What is an advantage of becoming a

partnership?

What is a disadvantage of becoming a

partnership?

What document do you need to set up a

partnership?
 AIMS
To understand what a limited company is and
the different types

To know the difference between a PLC and Ltd

To identify at least one advantage and

disadvantage of each type of limited company

To be able to describe the process of forming a

limited company
NAME THE LIMITED
COMPANY?
WHAT IS A LIMITED
COMPANY?
A limited company is a business that is owned by
its shareholders who have bought shares from
the company, run by directors and has a separate
legal identity from its owner.
PRIVATE
SECTOR

SOLE PARTNERSHIP LIMITED FRANCHISE CO-OPERATIVE

TRADER COMPANY

PUBLIC PRIVATE
WHO CONTROLS THE
COMPANY
SHAREHOLDERS So it is owned by its
shareholders and
elect run by its directors
who are elected by
DIRECTORS the shareholders!!!

who oversee

MANAGERS
 ADVANTAGES
Each shareholder enjoys limited liability.

The debt is spread among shareholders.

Easier to raise finance.

There is continuity whatever happens.

It is easier for the business to borrow money.

 DISADVANTAGES
A complex management structure may be needed.

A lot of legal formalities required to set one up,

which maybe costly and time consuming.

The company is accountable to its shareholders

and creditors.
The company must produce accounts which are
available to the public.

The performance of the company may not be

reflected in its share price
PUBLIC LIMITED COMPANY
Must have PLC after its name.

Can be quoted on the stock exchange.

Minimum 50,000 authorised share capital.

Shareholders have the right to sell their shares to

whoever they want.

Minimum number of shareholders is seven.

Usually larger.
PRIVATE LIMITED COMPANY
Must have Ltd after its name.

Restrictions can be placed on the sale of shares.

Not allowed listing on the Stock Exchange.

Not allowed to advertise their shares.

Minimum number of shareholders is two.

Usually smaller.
DIFFERENCES BETWEEN AN
LTD AND A PLC
Public Limited Company
(PLC)
The shares are offered to the
general public on the stock
exchange, meaning anyone can be a family or friends.
shareholder in the company.
If something goes wrong it could
have an adverse effect on the
public.
Shares can be transferred freely
Private Limited Company
(Ltd)
The shares are not offered for sale
to the general public, usually just
Probably wouldnt have an adverse
effect.
Usually sold to family or friends and
can only be done if all shareholders
agree.
SO AS YOU CAN SEE THEY ARE
VERY SIMILAR!!
 SO REMEMBER!!!!!
The main difference!
In a private limited company
the shares are not offered for
sale to the general public.
Where as in a public limited
company they are!
 FORMING A COMPANY
The steps to forming a limited company are:

1. Register with Registrar of Companies at

Companies House

2. Draw up a Memorandum of Association

3. Draw up the Articles of Association

4. Obtain a Certificate of Incorporation from

the Companies Registrar

5. The company can then start trading

MEMORANDUM OF
ASSOCIATION
This includes:

Name of company

Location of registered office

Company objectives
The amount of capital a company has and the
number of shares
ARTICLES OF ASSOCIATION
These are the internal rules of the company and
should include:
Names of Directors

Rights and duties of Directors

Rights of shareholders

Types of shares

How profits are to be divided

Method of electing Directors

CLIVE AND PAULINES
CAMEL RIDES
YOU SAY WE PLAY
 HOW TO PLAY
The class is split into 2 teams.

Each team decides on one volunteer to sit at the

front with their back to the board.

A key word is shown and the teams have to

explain the word without using that word (or
words that rhyme with it) e.g. if David Cameron
was the word, teams would say something like
current British Prime Minister.

The winning team is the one whose volunteer

gets the most correct guesses..
Private Limited
company (Ltd)
Limited
liability
Shareholders
Articles of
Association
 Stock
Exchange
Public Limited
company (PLC)
Unlimited
liability
Directors
Shares
Memorandum
of Association
 QUESTIONS
What is a limited company and the different
types?

What are the differences between a PLC and

Ltd?

Can you identify at least one advantage and

disadvantage of each type of limited company?

What is the process of forming a limited

company?