forming a private limited company
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Forming a Private Limited Company. Forms of Business Ownership. What is a Private Limited Company?. A private limited company is where between one and ninety nine people come together and form a business The owners are called shareholders and they invest money in the company - PowerPoint PPT PresentationTRANSCRIPT
Forming a Private Limited Company
Forms of Business Ownership
What is a Private Limited Company?
A private limited company is where between one and ninety nine people come together and form a businessThe owners are called shareholders and they invest money in the companyThe profit is divided up among the shareholders and distributed in the form of dividends“Ltd.” is written after the name of the companyThe annual accounts are sent to the Registrar of Companies. They are not published
Advantages of a Private Limited Company
Shareholders have limited liability
Extra capital is available to fund expansion of the business
Continuity of existence
Disadvantages of a Private Limited Company
Costly to set up
A lot of legal requirements when forming a company
Shares cannot be transferred to the general public
Forming a Private Limited Company
Promoters
PromotersSolicitor
Hire…
Who completes…
Form A1Memorandum of Association
Articles of Association
Companies Registration Office (CRO)
Sent to…
Certificate of Incorporation
Now the company can begin trading
Board of Directors
Managing Director/ Chief Executive Officer
Shareholders
IT Manager
Marketing Manager
Finance Manager
Production Manager
Elect…
Appoint…
The owners of the company (1-99)
The people elected to run the company (max. 12)
The MD/CEO runs the company on a daily basis with the assistance of the department managers
Forming a Private Limited Company
You need 1 – 99 people who invest money and are shareholders
The people involved in forming a company are called the promoters
The promoters employ: An accountant – for financial advice A solicitor – to prepare the legal documents which
must be sent to the Companies Registration Office (CRO)
What documents must be filled out?
Memorandum of Association – sets out the relationship of the company to the general public, i.e. rules and regulations governing how the company deals with the publicArticles of Association – sets out the internal rules and regulations of the company, e.g. shareholders voting rights, how directors are elected, powers and duties of the directorsForm A1 – sets out the details of the company, it’s directors and their signatures (Declaration of Compliance with the Companies Acts 1963 – 1990)
These documents are sent to the Registrar of CompaniesThe Registrar will check to see if they are all in orderIf so, a Certificate of Incorporation is issued This is the birth certificate of a company It has a separate legal existence from its owners The shareholders have limited liability The company can sue and be sued in its own
name
Memorandum of Association
Articles of Association
Form A1
Board of Directors
When the company is incorporated it will hold a meeting of its shareholders who elect a board of directors to run the company on a day-to-day basis
They report to the shareholders annually on the performance of the company at the Annual General Meeting (AGM)
SummaryWhat is a private limited company?How do you know if a business is a private limited company?Can you list three advantages and three disadvantages of operating as a private limited company?What documents are needed to form a private limited company?What is the certificate of incorporation?What do the board of directors do?What is an AGM?