Companies

Question 1

which companies can be limited by shares?

Answer 1

private and public companies

Question 2

what are the types of private companies? give a brief explanation of each

Answer 2

Private company limited by shares (Ltd)
 owned by SHs

Private companies limited by guarantee
 Often used by non-profits + charities.
 No shares but members agree to contribute a fixed amount if the company is wound up.

Unlimited companies
 Rare. Shareholders have unlimited liability.

Question 3

what is an unlisted public company?

Answer 3

a company which can offer shares to the public but is not listed on the stock exchange. It must obtain a trading certificate to sell shares to the public.

Question 4

what are the similarities and differences between LTDs and PLCs? Specifically:
 directors
 company secretary
 AGMs
 shares
 decision procedures

Answer 4

• all companies but have at least 1 natural D. LTDs only require 1 D & PLCs require 2
• LTDs do not need a CS & PLCs must have a CS
• LTDs (generally) are not required to have an AGM & PLCs must hold an AGM
• LTDs cannot offer shares to the public & PLCs can offer shares to the public
  o PLCs are therefore subject to higher regulation & have greater administration requirements
• LTDs can use the written resolution procedure (WR) and general meetings (GM) to pass resolutions & PLCs are not permitted to use the WR procedure

Question 5

what are the advantages of operating as a company? (1)

Answer 5

SLP, therefore members have limited liability

Question 6

why is it advantageous to become a PLC?

Answer 6

o Can offer shares to the public
o PLC status considered to have more kudos

Question 7

what are the disadvantages of operating as a company?

Answer 7

• Onerous administration, accounting and filing requirements (i.e. register of directors, charges, annual accounts + constitutional documents) (more onerous if PLC)
• Information filed with CH is publicly available