Please enable JavaScript.
Coggle requires JavaScript to display documents.
Unit 4/ limited companies - Coggle Diagram
Unit 4/ limited companies
limited company
owned by shareholders
people who invest money for shares of the company
run by directors
people appointed by shareholders to control and make the strategic decisions for that company.
.
an owner can be a director
There isn't a law stopping an owner from being a director
Owners and shareholders in a limited company are protected
by limited liability.
They cannot lose any more money than they have invested in the company, and cannot have their personal assets claimed in order to pay back debts that are owed.
This means setting up an Ltd is low risk
company is a separate body from owner
setting up an ltd
Ltds need to do paper work
they are issued with a Certificate of Incorporation.
This is an official document which shows that the company has come into existence.
they also have to do a
Memorandum of Association,
Association, which states who
they are, where they are based and what they do.
Articles of Association
an internal ‘rulebook’,
which sets out how the business will be run.
types of limited companies
private limited company
the difference between an Plc and an Ltd is that a private limited company chooses its shareholders and a public limited company doesn't choose the shareholders
a Ltd can become a Plc by floating their shares to the stock market
they tend to be smaller bussineses and the company has restricted ownership, it is not on the stockmarket
advantages
Limited liability
Minimum of 1 director and 1 shareholder
Easy to set up/affairs still private
Easier to raise capital/borrow from bank
Share transfers need agreement of all
Sell shares to people you trust
disadvantages
Cannot sell shares to the public
More regulations to comply with
Accounting procedures may be more costly
they can choose who owns and the price of the company
public limited company
In a public limited company anyone can by shares of the company meaning they will own a part of the company.
advantages and disadvantages
advantages
Limited liability
Increased capital as public can buy shares
Minimum of 2 directors and 2 shareholders
Shares increase in value if company successful
May have a very high profile in the media
disadvantages
Many regulations to comply with Accounts (and problems) are public knowledge
Shareholders may sell shares if dividends are poor, devaluating the company
Original owner may lose overall control.
More financial information has to be public.
Setting cost can be expensibe
Plc are at risks of a takeover meaning if a person has more shasres than the original owner the company's main owner is the new shareholder with the most shares.
multinationals
features
Huge assets
Highly qualified and experienced professional executive and managers
Powerful advertising and marketing capacity
Highly advanced and up-date technology
Highly influential both economically and politically
reasons to become a multinational
To Operate Closer to Target International Markets
reduced transport costs
Gaining access to lower costs of production
many MNCs have taken advantage of lower production costs from operating in developing economies, doing things as building factories for lower manteinance cost
Avoiding Protectionism
You are not bounded by the laws in a country
A bussines which operates in more than one country
Being a multinational is a type of organisational structure for a business