FORMS OF BUSINESS
ORGANIZATIONS
COMPANIES
OBJECTIVES
By the end of the lesson, learners will be able to;
1. Understand what a company is and explain the forms of company.
2. State the sources of finance when one wants to engage in company.
3. Outline the characteristics/features of company.
4. Give the difference between private and public companies.
• A business organization often acquires resources in the form of man,
materials, machine, and money:
• Land
• Labour
• Capital
• Entrepreneur
• Knowledge
To generate either goods or services to the public. This is therefore
means that, any entity involved in the transformation of resources into
products in order to meet the need of the people is an organization.
• Organization is required to turn ideas into activities which can be maintained over a
period of time, and carried out effectively.
• All businesses start off from an original idea. If the idea is to be given shape and form to
become product, which will be sold successfully over a long period, then it will have to be
nurtured and developed by business organization with clearly established aims.
• The illustration below denotes how an organization is formed.
• The idea
The Plan
The Organization
WHAT IS A COMPANY
• Operations of companies are governed by the companies code,
1963(Act 179) of Ghana.
• A company is an association of two (2) or more people (Shareholders)
who contribute capital for the purpose of carrying out business with
the objective of making profit.
• Shareholders are the owners of a company who bring the capital
and other resources together and enjoy their share of profit for the
year as (Dividends).
FORMS OF COMPANIES
There are two (2) main forms of companies.
1. Public Companies: which have their shares traded on the main market of
the stock exchange and
2. Private Companies: which impose some restrictions on the trading in their
shares.
These two main forms of company are identified in the section 9(2) of Act
179.
PUBLIC COMPANIES
• Public companies have the opportunity to become larger than the
other forms of private business organization. They are allowed to raise
capital through the medium of stock exchange which quote their share
prices. It has a minimum of seven(7) shareholders and no stated
maximum of shareholders. It publishes its annual accounts to the
general and can also transfer its shares freely without restrictions.
PRIVATE COMPANIES
•
Private Companies can have from two (2) to fifty (50) members as shareholders
and the companies can expand by raising finance from shareholders.
This mostly consist of family members, close friends, workers of a particular sector
or industry. But their shares are not quoted at the Ghana stock exchange and they not
allowed to advertise the sale of shares publicly.
Their accounts are not to be published to the public and transfer of shares cannot be
done without the knowledge of others (shareholders)