Limited CompaniesRenno & Igo from 10 Andromeda

What is Limited Companies?

Limited companies are incorporated business or corporations. They are set up as legal entities and exist

quiet separately from their owners.

Limited Companies are often Family Business or a

smaller unincorporated

business

Dhunseri Tea Company Ltd.

A Limited companies have Ltd. At the end of its company name. Stating that the company is a Limited

company.

Bentley Motors Ltd.Aston Martin Lagonda Ltd.More examples of Limited Companies

Who own these companies?

There are the Shareholders and the Owner itself. The shareholders own the companies as well because whether they invest the company, they will own a part, or share of the company.

They are responsible for its own affairs and debts.

Owners and Shareholders of the business have limited liability for debts of business.

Owners and Shareholders can own property, employ people. They also pay the tax.

Types of Limited Company

Private limited company

Number of Shareholder may be restricted. Shares cannot be shared without agreement with all of the share holders.

Public limited company

Larger than private. Shares may be freely bought and sold to the country in which the company registered.

General principles of both public and

private are similar throughout the

worldSpecific legislation is different though in some country.

EG: Bermuda

Limited Company around the World

Ltd. (English speaking countries)

Pty Ltd (Australia and South Africa)

SA (Europe)

KK, YK (Japan)

Having your own limited company?

How do you make one?

Few steps to get Limited

Register to the local Registrar of Companies

Provide legal documents showing its purpose and structure of the business, its aim and goals as well. A list of people related to the companies should be stated aswell.

Once approved, the company now is Limited and are enabled to start trading. The company must create accounts for the public to inspect.

The power of Sharing Share is part of the company.

Each share allows that person to have the power to vote on running the company.

More share a person have, the more he/she can influence the company. If the person have half the shares in the company, he/she controls almost everymove from the company.

Source of CapitalMost capital comes from selling shares. For a private

limited company, the amount of money that can be raised is limited by the small number of shareholders.

A limited company can also raise money by borrowing money from banks and other financial institutions.

What happens if things go wrong?

When a company gets into debt and is unable to pay the debt, its creditors can sue the company to recover their money. If no solution can be found, the company will go into liquidation and the assets of the company will be sold.

Public Limited Companies

Public limited companies can freely trade their shares and they are able to sell their shares to the general public. By doing this, they have potential access to limitless funds which can be used to develop the business.

Example: ASDA, Tesco, and other supermarkets,

NatWest, and other banks.

Reasons Behind Going Public

Most companies decide to go public to gain access to an almost limitless source of capital. Many businesses are able to find expensive development and expansion programmes by issuing more shares.

Advantages and Disadvantages of Private Limited Company

Advantages Disadvantages

Incorporated business Complicated to set up

Owners have limited liability Subject to more legal constraints

Access to greater sources of funding

Requires expensive administration

As a separate legal entity has continuity of existence and can be transferred to new owners

Decision-making may be slower

Needs approval of other shareholders to sell shares

Advantages and Disadvantages of Public Limited Company

Advantages Disadvantages

Incorporated business Complicated to set up

Owners have limited liability Subject to more legal constraints

Access to greater sources of funding

Requires expensive administration

As a separate legal entity has continuity of existence and can be transferred to new owners

Slow decision-making due to its size

No restrictions on buying and selling shares

Separation of ownership from control may lead to conflict of interests between business and its owner

The directors may be voted out of office at a shareholders’ meeting, leading to lack of management continuity

May be liable to takeover

ActivityBy going public, the business is able to gain access to

more source of capital. It will be able to fund expensive development of chocolate-making and be able to grow and expand due to selling its share to the public.

However, by going public, the business will be vulnerable to takeover. Decisions may also be made by the shareholders and due to the large size of the business, it will be slow.