Ownership: owned by at least two to a maximum of fifty shareholder
Management and Control: it managed and control by the board of directors
Legal status : The business is recognised at law as a legal person. It is referred to as an
incorporated
business
Liability : The shareholders enjoy limited liability. If the business fails the shareholders’
personal
assets cannot be taken. They only lose the capital they have invested in the business.
Continuity : There is continuity
Tax Issues: there is double taxation. The shareholders pay tax on their incomes and the
business also
pay corporate tax
Advantages
1 –shareholders have limited liabilities
2 –more capital can be raised
3 –greater status than an unincorporated businesses
4 –easy to transform into public limited companies
5 –do not have to publish annual accounts in the press
Disadvantages
1–not easy to form (up to six months)
2–has to fill complex tax forms
3–cannot raise capital through the stock exchange
4- quite difficult for the shareholders to sell shares
b) Public limited companies
-a large business, with the right to sell shares to the general public. The share prices
are quoted on the
national stock exchange. They have at least two shareholders to no maximum limit.
Shares are freely
transferable. The public can be invited to subscribe to shares and debentures through a
prospectus. Can
only start business after complying with all the requirements of the Companies Act.
Annual
accounting reports (financial statements) are supposed to be published in the press.
Must keep a
register of investors and directors’ shareholding
Formation: There are more complex legal formalities. Three documents should be
drafted by the
founders of the company and these documents include the memorandum of
association, articles of
association and the prospectus
Ownership: owned by at least two to no maximum limit of shareholder
Management and Control: it managed and control by the board of directors
Legal status : The business is recognised at law as a legal person. It is referred to as an
incorporated
business