Ownership of Swaledale Cheese Company SCC are a Private Limited Company (Ltd) Owners (now called shareholders) have to be invited to buy shares in the.

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Presentation transcript:

Ownership of Swaledale Cheese Company SCC are a Private Limited Company (Ltd) Owners (now called shareholders) have to be invited to buy shares in the business. These shareholders are not personally responsible for any debt should the business fail This is known as “Limited Liability”. You can only lose as much as you invest!

Limited Liability Q. Is having limited liability an advantage or a disadvantage? A. An advantage Q. If you invested £10,000 – how much is the most you lose if the business failed? A. £10,000

Other features Many ltd businesses only have three or four shareholders. The minimum is one director and one shareholder and there is no upper limit on the number of shareholders.

Important Documents! There are two legal documents that have to be completed in order to form a limited company: The Memorandum of Association – this gives details about: The name of the company The address of the registered office A statement that the shareholders will have limited liability The type and amount of share capital A description of the business activities The Articles of Association – this gives details about: Details about the voting rights of the shareholders How profits will be distributed

Your Task Log onto your computer and in your section on SCC: Tell me what type of ownership they are Describe the key features of an Ltd Explain that they have limited liability and what this means Describe what documents they need to complete to be an Ltd.

Other advantages The business can still stay small so decisions are made more easily The owners usually work in the business are interested in its success. It is quite easy to set up a private limited company. In some cases the owners may only have invested £100 or £200 to start up. Shares can only be transferred if all shareholders agree, they cannot be sold to the public. This means the owners have direct control over the business. Banks are more willing to lend money to a limited company. The accounts are still private between the owners, their accountants and the Inland Revenue.

Drawbacks of Ltd’s Shares cannot be sold to the general public to raise additional capital. Limited companies have to comply with more regulations than sole traders or partnerships. A limited company is not allowed to trade under the name of an existing company as this will cause confusion for customers and suppliers. If the company ceases trading it must officially be ‘wound up’. This is costly and time consuming.