Formation of a Private Limited Company

Objectives At the end of this lesson, students should be able to…. Complete a Memorandum of association List private limited companies within their locality Talk about Articles of Association and form A1

Robertinos LTD. Wexford transport LTD

Form A1 Includes; Company name, address, and sectary Details about directors including their occupations Signature of each director to show that they will run company properly ( Declaration of Compliance

Memorandum of Association External Rules of the company Name of the company Objectives : What the co. does Statement of Limited Liability Statement of Authorised Share Capital (Number of shares they can sell) Signatures of directors Sent to Companies Registration Office

Articles of Association Internal Rules of co. Name of company Rules for meetings Voting rights of shareholders Rules for election of directors Borrowing power of the company Sent to registrar of companies

Certificate of Incorporation Birth Certificate of the company Include company registration number Means that company is a separate legal entity Company can sue and be sued in it’s own name Received from registrar of companies

Summary of Company Documents Memorandum of Association Articles of Association Form A1 Registrar Of Companies Certificate Of Incorporation

Recording the Share Capital in the Accounts Debit Bank A/C Credit Share Capital A/C

Record €100,000 Share Issue in the Books of First Entry BANKA/C DateDetailsFTotalDateDetailsFTotal 1/1/08SHARESGL100,000 SHARECAPITALA/C DateDetailsFTotalDateDetailsFTotal 1/1/08BANKCB100,000

What is Share Capital? When you need money to start your company you can sell shares to people. A shareholder is willing to invest money in the business to obtain part ownership of the business and also to share profits (dividends)

Distinguish between Authorised Share Capital Maximum amount of shares you are allowed to issue/sell Issued Share Capital Actual amount of shares you have issued/sold

AGM Annual General Meeting. By law every company should hold one All shareholders must be invited to attend the meeting. AGM’s give shareholders an opportunity to hear how company is performing At this meeting the directors will decide how much of the profits are paid to be shareholders(Dividened)

Recap of Key Terms Mem of Assoc. Articles of Assoc. Cert. of Incorporation Shares Dividends Authorised Share Capital Issued Share Capital

Co-operatives Forms of Business Ownership

What is a co-operative? A co-operative is a business owned and run by its members who have a common bond To become a member a person must buy at least one share Each member has one vote The profit is distributed among the members Members have limited liability Co-ops are managed by a management committee

Formation of Co-ops Seven people are required Apply to the Registrar of Friendly Societies Certificate of Incorporation is issued The co-op must report annually to the Registrar of Friendly Societies

Types of Co-ops Producer Co-ops – mainly agricultural co- ops. They collect the raw material from the farmers, e.g. milk, process it and sell the finished product, e.g. cheese

Types of Co-ops Retailer Co-ops – these co-ops buy directly from the manufacturer and sell to members

Types of Co-ops Worker Co-ops – are set up where businesses close down and the workers decide to pool their money and set up a co- op, e.g. Carrigdhoun Pottery, Greencaps (Dublin Airport)

Types of Co-ops Financial Co-ops, e.g. credit unions – set up by people sharing a common interest, e.g. live/work in the same area. They encourage saving and provide loans

Advantages of Co-ops Members have limited liability One vote per member The members own the co-op, which is a big incentive to do business with the co-op Profits are distributed among the members

Disadvantages of Co-ops Lack of finance No incentive to buy more shares The management committee may not have the business expertise to run a modern business

Summary What is a co-op? How is a co-op formed? What are the advantages and disadvantages of a co-op as a form of business ownership? Outline the different types of co-ops in existence in Ireland