Setting up a limitedCompany

D erek Roger Malcolm and John started a limited company in Britain

Roger £ 20.000 Derek £ 55.000 Malcolm E15.000 John £.1o,000
D erek Roger Malcolm and John are all investors and shareholders. Roger invested £20.000 yohn put in £ 10.000
0 erek is the majority shareholder (he owns the most shares ) Derek also has a controlling interest he öwns nohe theh!
S0% of the shares ).The company's copital ( the moneyiF has for buyinggòodsand'equipment is 00,000.P
T hecompany'scapital is divided into 00.000 shares of £l each .£l is the iominalvalue (or the þaryalue or the face
value ) of each share Malcolm owns 15.000 shares.The nominalvalue of his 'shạres is £ 15,00ð
After a year, the companymakes €I5.000 pro t .This is divided between the shareholders.Thecompånyannouncesia
d ividend of I5 p per share (15.000 pro t - 100.000 shares ) i!
Malcolm received £2,250 (15.000 shares multiplied by 15 p )
nvesting in a limited company
twhen a limited company has started trading.you do not invest in shares by giving more capital tö thecompany. you
buy them from one of the shareholders .If it is a private limitedcompany.a shareholderjcahodlysell shares if al! thet
Other shareholders agree.If it is a public limitedcompany shares can be bought and sold freely Usially at astock
exchange.If the company is doing well and paying high dividends , then you might pay horéë thar!the vace valúe of:the
Shares .The price you pay at the stock exchange ( or to a shareholder ) for your shares is theirimarket valuę.
1f thecompanyfails ,it will stop trading andgo into liquidation.Thismeansthat all thecompänysproperty dndi.
equipment ( its asets ) must be sold and the money from the sole will be used to pay its debts to its cféditorsThe
S hareholders may lose the money they paid for the shares .If the company still does nothdve,enoughmoney. to pdy all
its debts , the shareholders do not have to pay any moremoney .In other words the shareholdeřs ibility for dzbts is:!
Limited to the value of their shares .On the other hand ,if you are an owner.ofa bušihėss whith is not limitedi,for.:
example a sole proprietorship ( owned by one person ) or a partnership (owned by between 2to20 people ) and your
business fails , you will go bankrupt In this case you might have to sell your 'own privgte possessions ( you house cặf
urnityre etc ) to pay all your credits .In other words, sole proprietors and partners have ynlimited liability, for, theic
irm 's debts

H
YPES OF BUSINESS
Complete this table about the four mainkinds of businessin Britain takingyour information fem the text
types of business Number of owners Name of owners liability ofowners i If Business. foilsAdditioral 1,
(nfo rmation

S ole proprietor a..... unlimited owhers go

partners ii:
**..e.. .ee..ee..*.e.e*e.eeesee. ...........s.... .......

2.- 50

2 or more
h conpartyjöes:
:
ind words that correspond to this de nitjons
.Themoneyshareholders put into acompanytobuy property andequipment. soit tin stártitraing:i.i
.Thepriceyoupayforshares
whenthe
company
hasstartedtradingistheit .
.To put money into a business or a abnk account so that it will make a pro tı.
.The price written on a share is its...
.one of the owners of a limited company
your legal duty to your creditirs. 7.When a limited company fails it goes'i.
Sharesinpubliclimited
companiesareusuallyboughtandsoldata ...

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