Companies
There are four main types of companies which are as follows:
- Private Company Limited by share- members liability is only limited by the amount unpaid on shares they hold. This includes community interest companies (CICs) which are private companies limited by shares.
- Private company limited by guarantee- members’ liability is limited by the amount they have agreed to contribute to the company’s assets if it is wound up. This includes all RTM (Right to Manage companies, common hold associations and those community interest companies which are companies limited by guarantee.
- Private unlimited company there is no limit to members’ liability.
- Public limited companies (PLC) - the company’s shares may be offered for sale to the general public and the members liability is on only limited to the amount unpaid on shares held by them. This also includes community interest public public limited companies
All companies are formed in close to the same way they register with Companies House. The document companies take with registering with Companies house are Memorandum of Association and Articles of Association. The Memorandum of Association sets out the companies name, where it is registered (England, Wales or Scotland), it sets out the companies objectives and it contains the information on the share capital.
The Articles of Association contain information on the internal structure of the organisation it covers information such as rules for internal structure and management; that articles deal with items such as meeting procedures, powers of the directors, members’ rights, procedures for paying dividends and winding up. These articles are quite long compared to Memorandum of Association, however the Companies Act 1985 has mechanisms to reduce the preparation of the articles of association. The Articles are to be signed by the persons described on the Memorandum.
The Articles are subordinate to the Memorandum which is defines the powers of the company. The purpose of the Articles is to outline the duties rights and powers of the governing body of the business the Memorandum and the Articles of Association may be read together to supplement it and to further description of matter.
The Memorandum of Association and the Articles of association are the constitution for the company, they are approved by licensing as they act as an artificial person so there is no single person to take responsibility they must operate within the capacity which is set. The corporations capacity is set within the Memorandum of Association Clause 3 (the objectives).
If companies act outside the objectives that it considered that the act is ultra vires- “beyond its power” and therefore void fortunately the Companies Act 1989 relaxed this rule allowing for the companies to statement “The company is to carry on business as a general commercial capacity”. This statement allows the company “to trade or carry on business with whatsoever and; the company has the power to do all such things as are incidental or conducive to the carrying on of any trade or business by it”.
There are also statutory forms which are to filled in and to be returned; Form 10 which is the Statement of the First Directors, Secretary and Registered Office; on the form you must inform Companies Housed of the company’s registered office and the names and addresses of its directors names and addresses its directors and of the secretary, Form 10cs my be needed a Form 10 only has room for 10 directors. Form 12, Declaration of Compliance with the Requirements of the Companies Act, this states that the company has met the legal requirements of incorporation.
Organisations are given a corporation number which is unique it last the whole life of the company it is used to identify the company.
Organisations will have to find out how much the company is worth before find the value for shares (nominal value) this is done by finding how well the business as done in the past and how well it is expected to do in the future; this is rather complicated and it is recommended that it to be done by a merchant bank.
Shareholders with the largest share have the most control over the business; if it is 50% they with have total control of the business, when shareholders have 5% the will have the right to participate at the AGM. Shareholders control of the business is that they are able to vote out directors when they find issue with the way which directors run the organisation this may be because of ethical issues and issues of directors taking large salaries while the company is doing unsuccessfully
There is also the directors of the company their duty is to the company and to the shareholders they make the decisions for the business driving the business forward, shareholders elect the directors of the company and secretary.
Read more about this topic: Business Ownership Within England And Wales
Famous quotes containing the word companies:
“Socialite women meet socialite men and mate and breed socialite children so that we can fund small opera companies and ballet troupes because there is no government subsidy.”
—Sugar Rautbord, U.S. socialite fund-raiser and self-described “trash” novelist. As quoted in The Great Divide, book 2, section 7, by Studs Terkel (1988)
“The recent attempt to secure a charter from the State of North Dakota for a lottery company, the pending effort to obtain from the State of Louisiana a renewal of the charter of the Louisiana State Lottery, and the establishment of one or more lottery companies at Mexican towns near our border, have served the good purpose of calling public attention to an evil of vast proportions.”
—Benjamin Harrison (1833–1901)
“In the U.S. for instance, the value of a homemaker’s productive work has been imputed mostly when she was maimed or killed and insurance companies and/or the courts had to calculate the amount to pay her family in damages. Even at that, the rates were mostly pink collar and the big number was attributed to the husband’s pain and suffering.”
—Gloria Steinem (20th century)