Company Structure,New

7/24/2019 Company Structure,New

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Company structureCompany structureUnit 3Unit 3



What is a company ?What is a company ?

AA companycompany is a form of businessis a form of business

organizationorganization

Generally, a company may be aGenerally, a company may be acorporation,partnership, association,corporation,partnership, association,

joint-stock joint-stock company, trust, fund, orcompany, trust, fund, or

organized group of organized group of persons, whetherpersons, whether

incorporated or notincorporated or not,,



Types .Types .

• 1.1. A company limited by guaranteeA company limited by guarantee..• ommonly used where companies are formed forommonly used where companies are formed for

non-commercial purposesnon-commercial purposes, such as clubs or, such as clubs orcharities. !he members guarantee the paymentcharities. !he members guarantee the payment

of certain "usually nominal# amounts if theof certain "usually nominal# amounts if thecompany goes into insol$ent li%uidation, butcompany goes into insol$ent li%uidation, butotherwise they ha$e no economic rights inotherwise they ha$e no economic rights inrelation to the company. !his type of company isrelation to the company. !his type of company iscommon in &ngland.common in &ngland.



• 2.2. A company limited by shares.A com

pany limited by shares.

• !he most common form of company used!he most common form of company used

forfor business venturesbusiness ventures. 'pecifically, a. 'pecifically, a

limited company is a (company in whichlimited company is a (company in whichthe liability of each shareholder is limitedthe liability of each shareholder is limited

to the amount to the amount individually invested individually invested ( with( with

corporations being (the most commoncorporations being (the most common

e)ample of a limited company.( !his typee)ample of a limited company.( !his type

of company is common in &ngland.of company is common in &ngland.



• 3.3. A company limited by guaranteeA com

pany limited by guarantee

with a share capitalwith a share ca

pital..

• A hybrid entity, usually used where theA hybrid entity, usually used where the

company is formed forcompany is formed for non-commercialnon-commercial purposes purposes, but the acti$ities of the, but the acti$ities of the

company arecompany are partly funded by partly funded by investorsinvestors

who expect a returnwho expect a return. !his type of. !his type of

company may no longer be formed in thecompany may no longer be formed in the

U*, although pro$isions still e)ist in lawU*, although pro$isions still e)ist in law

for them to e)ist.for them to e)ist.



• 4.4. A limited-liability companyA limited-liabil

ity company..

• (A company+statutorily authorized(A company+statutorily authorized

in certain states+that isin certain states+that ischaracterized bycharacterized by limited liability,limited liability,

management by members ormanagement by members or

managers, and limitations onmanagers, and limitations on

ownership transfer", i.e., L.L.C.ownership transfer", i.e., L.L.C.



• 5.5. An unlimited company with orAn unlimited company with or

without a share capitalwithout a share capital..

• A hybrid entity, a company where theA hybrid entity, a company where the

liability of members or shareholders forliability of members or shareholders forthe debts (if any) of the company are notthe debts (if any) of the company are not

limited.limited.



Less commonly seen types ofLess commonly seen types of

companies are:companies are: Companies formed by letters patentCompanies formed by letters patent. ost. ost

corporations by letters patent arecorporations by letters patent are corporationscorporationssole and not companies as the term is commonlysole and not companies as the term is commonlyunderstood today.understood today.

Charter corporationsCharter corporations. efore the passing of. efore the passing ofmodern companies legislation, these were themodern companies legislation, these were theonly types of companies. ow they are relati$elyonly types of companies. ow they are relati$elyrarerare, e)cept for $ery old companies that still, e)cept for $ery old companies that stillsur$i$e "of which there are still many, particularlysur$i$e "of which there are still many, particularly

many ritish banks#, or modern societies thatmany ritish banks#, or modern societies thatfulfil a %uasi regulatory function "for e)ample, thefulfil a %uasi regulatory function "for e)ample, theank of &ngland is a corporation formed by aank of &ngland is a corporation formed by amodern charter#.modern charter#.



• Statutory CompaniesStatutory Companies. /elati$ely rare. /elati$ely rare

today, certain companies ha$e beentoday, certain companies ha$e been

formed by a pri$ate statute passed in theformed by a pri$ate statute passed in the

rele$ant jurisdiction.rele$ant jurisdiction. ote that (0td after the company1s nameote that (0td after the company1s name

signifies limited company, and 20 "publicsignifies limited company, and 20 "public

limited company ## indicates that itslimited company ## indicates that its

shares are widely held.(shares are widely held.(



ompanies are also sometimes distinguished forompanies are also sometimes distinguished for

legal and regulatory purposes betweenlegal and regulatory purposes between publicpublic

companiescompanies andand priate companiespriate companies..

2ublic companies are companies whose shares2ublic companies are companies whose shares

can be publicly traded, often "although notcan be publicly traded, often "although not

always# on a regulatedalways# on a regulated stock echangestock echange..

2ri$ate companies do not ha$e publicly traded2ri$ate companies do not ha$e publicly traded

shares, and often contain restrictions on transfersshares, and often contain restrictions on transfers

of shares. n some jurisdictions, pri$ateof shares. n some jurisdictions, pri$atecompanies ha$e ma)imum numbers ofcompanies ha$e ma)imum numbers of

shareholders.shareholders.



Vocabulary :Vocabulary :

Hierarchical / pyramidal structureHierarchical / pyramidal structure 4 a4 asystem, especially in a society or ansystem, especially in a society or anorganization, in which people areorganization, in which people are

organized into different le$els oforganized into different le$els ofimportance from highest to lowestimportance from highest to lowest

Superior Superior 4 a person " in a society or4 a person " in a society ororganization # who is higher in rank,organization # who is higher in rank,

importance or positionimportance or position

SubordinateSubordinate 4 a person " in a society or4 a person " in a society ororganization # who has a position with lessorganization # who has a position with lessauthority or power than somebody elseauthority or power than somebody else



Line authority Line authority 4 power to gi$e orders from4 power to gi$e orders from

superior to subordinates " contrasts with 'taffsuperior to subordinates " contrasts with 'taff

Authority # in a hierarchical or pyramidalAuthority # in a hierarchical or pyramidal

structurestructure

Chain of command Chain of command 4 the system in which4 the system in which

orders are transmitted down from a higher-orders are transmitted down from a higher-

ranked position to the lower in an organization.ranked position to the lower in an organization.

!he chain of command also means that indi$idual!he chain of command also means that indi$idual

members take orders from only one superior andmembers take orders from only one superior andonly gi$e orders to a defined group of peopleonly gi$e orders to a defined group of people

right below them.right below them.



Functional structureFunctional structure 4 a structure in an4 a structure in an

organization, in which people are groupedorganization, in which people are grouped

together into functional or specifictogether into functional or specific

departments, each department has its owndepartments, each department has its ownfunction " such as purchasing, accounts,function " such as purchasing, accounts,

production, sales,marketing.... # and has aproduction, sales,marketing.... # and has a

head " eg. anager or 5irector#head " eg. anager or 5irector#

Department Department 4 a section of a large4 a section of a largeorganization or a company that has itsorganization or a company that has its

own functionown function



DecentralizeDecentralize 4 to gi$e some of the power of a4 to gi$e some of the power of acentral go$ernment, organization... to smallercentral go$ernment, organization... to smallerparts or organizations around the countryparts or organizations around the country

DivisionDivision 4 a large and important unit or section4 a large and important unit or section

of an organization. A di$ision is a part of aof an organization. A di$ision is a part of aprimary business, is not separated from thatprimary business, is not separated from thatbusiness, and the primary business is legalybusiness, and the primary business is legalyresponsible for all of the obligations and debts ofresponsible for all of the obligations and debts ofthe di$ision.the di$ision.

utonomous utonomous 4 able to ga$ern itself or control its4 able to ga$ern itself or control itsown affairs, able to do things without any helpown affairs, able to do things without any help

from othersfrom others



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