Chapter 27 - Forms of Businesses (PLC) Flashcards
(15 cards)
What is a Public Limited Company (PLC)?
A company whose shares are traded publicly on the stock market
PLCs must comply with specific regulations and are subject to greater scrutiny.
What are shares?
Units of ownership in a company
Shares represent a claim on a company’s assets and earnings.
Who is a shareholder?
An individual or institution that owns shares in a company
Shareholders may receive dividends and have voting rights.
What is a dividend?
A payment made to shareholders from company profits
Dividends can be issued in cash or additional shares.
What is the stock market?
A marketplace for buying and selling shares of public companies
The stock market facilitates capital raising for businesses.
What does flotation refer to?
The process of a company becoming a PLC and offering shares to the public
Flotation involves the initial public offering (IPO).
What is limited liability?
The condition where shareholders are only liable for their investment
This protects personal assets from company debts.
What is a prospectus?
A legal document issued to potential investors detailing an investment offer
The prospectus includes information about the company and the risks involved.
What is an AGM (Annual General Meeting)?
A yearly meeting of shareholders to discuss company performance
AGMs provide shareholders the opportunity to ask questions and vote on key issues.
What is share capital?
Money raised by issuing shares
Share capital is a key source of funding for companies.
What is the difference between ownership and control?
Ownership refers to shareholders (owners) while control refers to managers (controllers)
This distinction affects decision-making and governance in companies.
What is market capitalisation?
The total value of a company’s shares
Market capitalisation is calculated by multiplying the share price by the total number of outstanding shares.
What is a rights issue?
Offering existing shareholders more shares at a discounted price
Rights issues allow companies to raise additional capital while giving current shareholders preferential treatment.
What are listing requirements?
The rules a company must meet to be listed on a stock exchange
Listing requirements ensure transparency and protect investors.
Who are institutional investors?
Organisations that invest large sums in companies
Examples include pension funds, insurance companies, and mutual funds.
