1. Business’ legal structure (2) Lesson aims: To explain the divorce of ownership and control as a business grows To understand what is mean by corporate governance To know what not-for-profit organisations are

2. Starter (3 minutes): 1.Why is it difficult for an owner to keep full control as a business grows? 2.What role do shareholders have in the running of a limited company? 3.What do you think a not-for-profit organisation is?

3. Recap: What are the differences between unincorporated and incorporated businesses? What is a sole trader? Examples? Advantages? Disadvantages? What is a partnership? Examples? Advantages? Disadvantages? What is a limited liability partnership? What is a private limited company (Ltd)? Examples? Advantages? Disadvantages? What is a public limited company (PLC)? Examples? Advantages? Disadvantages? What factors affect the type of ownership chosen by a business?

4. What is the difference between stakeholders and shareholders? Examples of stakeholders?

5. Divorce of ownership and control In each type of ownership, there are different levels of control by the owners. Divorce of ownership and control occurs as a business grows; especially when it becomes a PLC. Shareholders have a say on objectives and major decisions depending on how many shares they have. See fig. 7.2, p.81.

6. Corporate Governance The systems and mechanisms used by companies to protect the interests of their shareholders. A Board of Directors is appointed to make the decisions on behalf of the shareholders; often the majority shareholders. Shareholders require a certain level of knowledge, but not in-depth; they can attend AGMs if they wish, and the trend is for more information to be given and for directors to be accountable. There has been much inquest into this issue; including several reports. There are more non- executive directors – directors who don’t necessarily work for the business.

7. What is a not-for-profit organisation? Can you think of any examples?

8. Not-for-profit organisations Includes voluntary and community organisations and charities. Also, co-operatives, mutual societies, social enterprises, pressure groups and trusts. Generally, volunteers and/or paid workers are involved and they usually either give profits away or invest. Often socially, environmentally and ethically aware and have a governing body.

9. Homework This week’s reading is Chapter 7, p. 74- 84. Remember to revise for Friday’s test. Homework: Staying private, p. 84. In for Wednesday after half term.

10. Practice exercise, p.83-84

11. So… What is the difference between a stakeholder and a shareholder? Examples of stakeholders? Why is there divorce of ownership and control as a business grows? How does corporate governance affect how a business is run? What is a not-for-profit organisation? Examples?