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Types of Buissnes
Types of Buissnes
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Unlimited liability
Membership is limited (maximal 20 people)
Possible conflicts by decision making may cause inefficient operation
Private limited company (Ltd)
2 to an unlimited number of persons can form an Ltd. It is also called a Joint Stock Company because the capital neede
the company is divided into shares. Each share represents a certain proportion of the capital. The shares cannot be tra
SE (Stock Exchange).
Advantages
Membership is not limited, so more people can contribute the capital needed
Limited liability
Disadvantages
Shares cannot be offered for public sale
Public limited company (Plc)
2 to an unlimited number of shareholders can set up a Plc. The shares of the company represent a certain propor
capital, just like by the Ltd. The shares entitle the shareholders to a proportion of the company’s profit and some other
which are up to the type of the share. The owner of the share is called shareholder. The shares of a Public limited co
allowed to be traded on the SE, and because of this they are (sometimes) subject to speculation.
Company policy is decided by the board of directors elected by the shareholders. There is also a chairman elected wh
board meetings.
Advantages
Limited liability
Easy to raise capital (even in large sums)
Easy to borrow money
Economies of scale
Disadvantages
Large amount of money needed for setting up the company
Annual accounts are open to public inspection
Municipal undertakings
Municipal undertakings are businesses, which are run by local authorities and are financed by local rates and charge
the use of the service.
State undertakings
State undertakings are businesses run by the government on behalf of the public. They are all legal entities separat
government. Usually they provide commercial or industrial functions.
These were the types of businesses. It might be useful to think over the terms related with company structure, company
changing ownership and bankruptcy. Topics concerning special business relationships might also emerge when you are
exam, so let’s go through them:
Franchising
Franchising is an agreement between the franchiser and the franchisee. The franchisee pays a sum certain in mo
franchiser. In return for the franchising fee the franchiser provides the products or techniques (or both) needed
franchisee’s company. By paying the franchising fee the franchisee obtains also the right to operate under the trade na
franchiser getting so a ready made business opportunity. The best example for franchising is McDonalds.
Holing companies
Companies can form a temporary or permanent combination in order to achieve a certain aim (for example to brin
several separate processes into one production unit) . The members of the holding retain their legal entity.
Co-operatives
Small units of agriculture or manufacturing combine together in order of sharing labour and enjoying the benefits of eco
scale and buying in bulk.
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And finally, here are some terms related to the founding of a company:
Memorandum of Association: It is called Certificate of Incorporation in the US. It states the company’s name, pu
authorized share capital, registered premises etc.
Articles of Association: It is called Bylaws in the US. It sets up the rights and duties of directors, shareholders etc.
Premises: it is the term for the places in which the company does work (shop, office, factory etc).
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