Individuals and groups of people doing business as a partnership have unlimited

liability for debts, unless they form a limited partnership. If the company does
poorly and cannot pay its debts, any creditor can declare it bankrupt. Failed
entrepreneurs may have to sell almost all of their possessions to pay off their
debts. This is why most people who do business form limited partnerships. A
limited company is a separate legal entity from its owners and is only liable for the
amount of capital that has been invested in it. If a limited company goes bankrupt,
it is liquidated and its assets are liquidated to pay off debts. If the assets do not
cover the liabilities or debts, they remain unpaid. Creditors just don't get all their
money back.

Most companies start out as limited liability companies. Their owners have to put
up the capital themselves, or borrow from friends or a bank, perhaps a bank
specializing in venture capital. The founders must draw up a Memorandum of
Association or a Certificate of Incorporation, indicating the name of the company,
its purpose, its registered office or premises, and the amount of authorized share
capital. they also draft Articles of Association or Bylaws, which are established by
the shareholders. They send these documents to the registrar of companies

A successful and growing company can apply to a stock exchange to become a

public limited company or a listed company. Newer and smaller companies often
join over-the-counter markets, such as the unlisted stock market in London or the
Nasdaq in New York. Very successful companies can apply to list or get listed on
major stock exchanges. Publicly traded companies have to meet a host of
requirements, including submitting to their shareholders an independently audited
report each year, containing the year's business results and a statement of their
financial condition.

The act of issuing stock or shares for the first time is known as floating a company
(going public). Companies generally use an investment bank to underwrite the
issue, to guarantee the purchase of all the securities at an agreed price on a
certain day, on which they cannot be sold to the public.
Companies wishing to raise more money for expansion can sometimes issue new
shares, which are typically first offered to existing shareholders at a price below
their market price. This is known as a question of rights. Companies sometimes
also choose to capitalize part of their profits, turning them into equity, by issuing
new shares to shareholders instead of paying dividends. This is known as a bonus
problem.

Buying a stock gives you your oldest share of ownership of a company. Shares
generally entitle their owners to vote at the Annual General Meeting or Annual
Meeting of Shareholders of a company, and to receive a proportion of the
distributed profits in the form of a dividend, or to receive part of the residual value
of the company if it enters. on sale. Shareholders can sell their shares on the
secondary market at any time, but the market price of a share, the price quoted at
any given time on the stock market, which reflects (more or less) how well or poorly
it is doing. going to the company, it can differ radically from its face value.