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Formation of a Private Limited Company

Formation of a Private Limited Company. Objectives. At the end of this lesson, students should be able to…. Complete a Memorandum of association List private limited companies within their locality Talk about Articles of Association and form A1. Robertinos LTD. Wexford transport LTD.

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Formation of a Private Limited Company

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  1. Formation of a Private Limited Company

  2. Objectives • At the end of this lesson, students should be able to…. • Complete a Memorandum of association • List private limited companies within their locality • Talk about Articles of Association and form A1

  3. Robertinos LTD. • Wexford transport LTD

  4. Form A1 • Includes; • Company name, address, and sectary • Details about directors including their occupations • Signature of each director to show that they will run company properly ( Declaration of Compliance

  5. Memorandum of Association • External Rules of the company • Name of the company • Objectives : What the co. does • Statement of Limited Liability • Statement of Authorised Share Capital (Number of shares they can sell) • Signatures of directors • Sent to Companies Registration Office

  6. Articles of Association • Internal Rules of co. • Name of company • Rules for meetings • Voting rights of shareholders • Rules for election of directors • Borrowing power of the company • Sent to registrar of companies

  7. Certificate of Incorporation • Birth Certificate of the company • Include company registration number • Means that company is a separate legal entity • Company can sue and be sued in it’s own name • Received from registrar of companies

  8. Summary of Company Documents

  9. Recording the Share Capital in the Accounts • Debit Bank A/C • Credit Share Capital A/C

  10. Record €100,000 Share Issuein the Books of First Entry

  11. What is Share Capital? • When you need money to start your company you can sell shares to people. • A shareholder is willing to invest money in the business to obtain part ownership of the business and also to share profits (dividends)

  12. Authorised Share Capital Maximum amount of shares you are allowed to issue/sell Issued Share Capital Actual amount of shares you have issued/sold Distinguish between

  13. AGM • Annual General Meeting. • By law every company should hold one • All shareholders must be invited to attend the meeting. • AGM’s give shareholders an opportunity to hear how company is performing • At this meeting the directors will decide how much of the profits are paid to be shareholders(Dividened)

  14. Recap of Key Terms • Mem of Assoc. • Articles of Assoc. • Cert. of Incorporation • Shares • Dividends • Authorised Share Capital • Issued Share Capital

  15. Co-operatives Forms of Business Ownership

  16. What is a co-operative? • A co-operative is a business owned and run by its members who have a common bond • To become a member a person must buy at least one share • Each member has one vote • The profit is distributed among the members • Members have limited liability • Co-ops are managed by a management committee

  17. Formation of Co-ops • Seven people are required • Apply to the Registrar of Friendly Societies • Certificate of Incorporation is issued • The co-op must report annually to the Registrar of Friendly Societies

  18. Types of Co-ops • Producer Co-ops – mainly agricultural co-ops. They collect the raw material from the farmers, e.g. milk, process it and sell the finished product, e.g. cheese

  19. Types of Co-ops • Retailer Co-ops – these co-ops buy directly from the manufacturer and sell to members

  20. Types of Co-ops • Worker Co-ops – are set up where businesses close down and the workers decide to pool their money and set up a co-op, e.g. Carrigdhoun Pottery, Greencaps (Dublin Airport)

  21. Types of Co-ops • Financial Co-ops, e.g. credit unions – set up by people sharing a common interest, e.g. live/work in the same area. They encourage saving and provide loans

  22. Advantages of Co-ops • Members have limited liability • One vote per member • The members own the co-op, which is a big incentive to do business with the co-op • Profits are distributed among the members

  23. Disadvantages of Co-ops • Lack of finance • No incentive to buy more shares • The management committee may not have the business expertise to run a modern business

  24. Summary • What is a co-op? • How is a co-op formed? • What are the advantages and disadvantages of a co-op as a form of business ownership? • Outline the different types of co-ops in existence in Ireland

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