Companies Flashcards

All 9 cards in this deck

Which two of the four main types of business ownership give their owners limited liability?

Private limited companies (ltd) and public limited companies (plc).

What is limited liability?

The owner or owners are only responsible for business debts up to the value of their financial investment in the business.

What is a private limited company (Ltd)?

A business with limited liability whose owners are shareholders who must be invited to buy shares; it registers with Companies House and files annual reports.

What is a public limited company (plc)?

A company whose shares can be bought and sold by the general public on the stock market.

Give one advantage of starting a business as a private limited company.

Any one of: the owners have limited liability; the business can sell shares to raise finance for investment.

Give one disadvantage of a private limited company.

Any one of: more paperwork and time to set up; accounts must be filed at Companies House; shareholders may not agree.

What is a dividend?

A payment made to shareholders out of a company's profit, as a reward for investing in it.

Why can dividends cause conflict in a limited company?

Shareholders may want profit paid out to them as dividends, while the directors may want to keep it to pay for expansion.

Why can a private limited company not be taken over without its shareholders agreeing?

Its shares can only be sold with the agreement of the existing shareholders, so an outsider cannot buy control without their consent.