Memorandum of Association

1553 Words Dec 21st, 2007 7 Pages
Types of Business Organisations

When we start to define a company it can be defined as generally a form of business organisation. In the legal field, a company is specifically ‘a corporation, or less commonly, an association, partnership or union that carries on a commercial or industrial enterprise. Generally a company may be a corporation, partnership, association, joint – stock company, trust, fund or organised group of persons, whether incorporated or not and (in an official capacity) any receiver, trustee in bankruptcy or similar official or liquidating agent for any of the foregoing. More specifically we can state a company as either one of four distinct business organisations, Sole Trader, Partnership, Private company and Public
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In the set up of a private company there will be pre-emption clauses where if a member decides that he/she wants to sell their shares then they must offer them to somebody already in the company before going public.
An advantage of being in a private company is that there is limited liability indicated by ‘limited ' or ‘Ltd '. The member is liable for the amount not paid in shares but not for the company 's debts.

Public Company

A public company usually refers to a company that is permitted to offer its securities (stock, bonds) for sale to the general public typically through a stock exchange. Usually, the securities of a public company are owned by many investors while the shares of a private company are owned by relatively few shareholders. Members of the public company also have limited liability as indicated by the words ‘public limited company ' (PLC or plc) at the end of the company name. Under the formation of a new business, members must be allocated a nominal value of shares (i.e. the least value shares can be sold for) to a value of at least £50000 which can be partly paid from a value of 25% as long as there is proof there is an ability to pay the outstanding amount.

Basic Company Structure

The basic company model assumes a separation of ownership and control. Shareholders are able to

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