IGCSE Business Studies

Incorporated Businesses
Aims:
1. Define private limited company and public limited company
2. Identify the main features of limited companies
3. recommend/justify a suitable form of business organisation to owners/management in a given
situation
Starter: Perfect Partners

 Find your perfect partner

 What sort of business would you set up?
 Who would be in control?
 How would you share the profits?
 Businesses that have a separate
Incorporated ______ identity from their owners.
Businesses:
Private Limited The owners have _______________–
Companies and they are not responsible for business
Public Limited debts
Companies
In legal matters the company will be
sued, not the __________
 Shareholders can only lose money
they have invested if the company
goes into debt (their personal
possessions are protected)
Limited
liability
Lower risk than operating as a sole
trader or partnership
Limited Companies: Facts

 They are incorporated, so business has separate legal identity to

the owners, their liability is limited
 Business owned by shareholders
 Shareholders own ‘shares’ which represent a part ownership in
the company
 Bike’s ‘R’ Us. Mike (50%), Ahmed (25%)
 1m shares, £1 each
 Who has the most control in the business?
 How much are Mike’s shares worth?
Share The company made £500,000 profit, £300,000 was retained in the business
ownership/limited  How much money will be shared between the shareholders?
company  How much did Mike get in dividends?

understanding  Share price rises to £1.50 next year, what’s the value of mike’s shareholding?
 If Ahmed sold his shares who would get the money?
 How much would Ahmed get?
 If the company collapses how much would Mike lose?
 PRIVATE LIMITED COMPANY (Ltd. or Sàrl
or LLC)
 Is an incorporated business owned by shareholders, shares can only be sold to family and friends.
 They are often small to medium sized businesses.
 Relatively easy to set up: Forms need to be filled in and sent the government’s registrar – ‘Companies
House’
 Once approved the business will be given a ‘certificate of incorporation’ and can start trading
 1 + shareholders (maximum of 50 non employees)
 Annual accounts have to be sent to Companies House but do not have to be shared publicly (so there is some
privacy)
Ref https://www.kmu.admin.ch/kmu/en/home/concrete-know-how/setting-up-sme/les-differentes-formes-juridiques/limited-company.html
PUBLIC LIMITED
COMPANIES (PLCs or SA or
inc.)

Are businesses owned by shareholders and the shares can be bought by the
general public on the stock exchange. They are often large companies.
 Is an incorporated business owned by shareholders, shares can be advertised
and are sold on the ‘Stock Exchange’
 https://www.visualcapitalist.com/the-biggest-companies-in-the-world-in-202
1
Which is the odd one out? One is not a PLC..
Questions/Tasks:
1. Who owns a company?

2. What does ‘limited’ mean if it refers to a

company?

3. A company goes out of business leaving debts of

$100 million. How much will the shareholders of the
company lose?

4. If a company has ‘Ltd’ after its name, what does

this mean?

5. Why is it easier to attract new shareholders to a

plc than a Ltd company?

6. Draw two tables and list three advantages and

three disadvantages of operating as a private limited
company and a public limited company
Go through types of business sheet
To finish