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Forming a Private Limited Company

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

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Forming a Private Limited Company

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  1. Forming a Private Limited Company Forms of Business Ownership

  2. 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 • The profit is divided up among the shareholders and distributed in the form of dividends • “Ltd.” is written after the name of the company • The annual accounts are sent to the Registrar of Companies. They are not published

  3. Advantages of a Private Limited Company • Shareholders have limited liability • Extra capital is available to fund expansion of the business • Continuity of existence

  4. 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

  5. Forming a Private Limited Company Now the company can begin trading Promoters Hire… Certificate of Incorporation Solicitor Promoters Who completes… Sent to… Form A1 Memorandum of Association Articles of Association Companies Registration Office (CRO)

  6. The owners of the company (1-99) Shareholders Elect… The people elected to run the company (max. 12) Board of Directors Appoint… The MD/CEO runs the company on a daily basis with the assistance of the department managers Managing Director/ Chief Executive Officer IT Manager Marketing Manager Finance Manager ProductionManager

  7. 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)

  8. 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 public • Articles 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 directors • Form A1 – sets out the details of the company, it’s directors and their signatures (Declaration of Compliance with the Companies Acts 1963 – 1990)

  9. These documents are sent to the Registrar of Companies • The Registrar will check to see if they are all in order • If 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

  10. Articles of Association Memorandum of Association Form A1

  11. 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)

  12. Summary • What 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?

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