Partnership

Date: 2015-10-07; view: 447.

Limited company

Sole trader

Read the three descriptions of company structures. Answer the questions.

Starting up

One person sets up and runs the company. The person provides all the capital and has unlimited liability for business debts, even if it means selling personal assets.

In a Limited company (US-Corporation), the capital is divided into shares, which are held by shareholders. Shareholders have limited liability, but they can vote at the Annual General Meeting to elect the Board of Directors. There are two types of Limited company:

1. in aprivate limited company,all shareholders must agree before any shares can be bought or sold.

2. in apublic limited company,shares are bought and sold freely, for example on the stock exchange.

A group of people provide the capital, set up the company and manage it together. There are two types of partnership:

Partners in anunlimited partnershipare like sole traders – if the business fails they are fully liable for all debts,and may even have to sell personal assets.

In a limited partnershipthere can be sleeping partners who do not participate in the management of the company. Sleeping partners have limited liability – in the event of bankruptcy, they only lose their investment, not their personal assets.

1. What are most people's main personal assets?

2. How can a sole trader get a capital to set up a business?

Think of five methods.

3. If a limited company has 5000 shares and each share is worth $2.50, what is the

capital of the company?

4. What are the advantages and disadvantages of being a sleeping partner?

5. What is the difference between a sleeping partner and a shareholder?

6. If a private limited company goes bankrupt, do the shareholders lose their personal

assets? Why?

7. What must you do to sell your shares in a private limited company?

8. What are the advantages of a public limited company? Think of three.

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