BUSINESS ENVIRONMENT

Business Environment



Business Environment

Learning Objective 1.1

Public Limited Company

In the United Kingdom, the existence of a public limited company engulfs the concept of an organization that is registered under Companies Act 1980. The Companies Act of 1980 sets and constructs the benchmark or the standard for an organization to qualify for the position of public limited company in the global environment. The organization that qualifies to be called as a public limited company must consist the authorized shares worth £50,000; in addition, the company must also have extra shares of worth £12,500 granted by the shareholders. Nonetheless, the companies that qualify for the public limited position connect “PLC” after the name of the organization. The public limited companies are authorized to trade their shares in the open market where they can be sold or purchased easily. It is an ease for this companies to grasp substantial amount of investment in no time as even a common man can also invest in a public limited company. Nonetheless, the image of the organization plays a major role with regard to attract the investments for the organization. In addition, the profit and dividend offered are also essential for investors (Richter, 1999, 49-66). There are several advantages and disadvantages associated with the public limited companies; however, these companies have a competitive edge over their competition as they can grow and diversify drastically due to their ease of attracting and incorporating investment from different sources.

Private Limited Company

The declaration of a company to be a private limited is strongly correlated with the liability that is associated with the company. This relationship is inversely proportional; hence, a private limited company can be termed as an organization that has limited liability. The limited liability can be defined as a scenario that engulfs a loss in which the loss of the shareholders does not exceed their original shareholding. A private limited company comprises minimum of two shareholders. If the presence of two shareholders is not acknowledged, the company cannot be declared as private limited. However, the company is authorized to engulf 50 shareholders; however, the number of shareholders cannot exceed 50. The legal existence of a private limited company is acknowledged. Nonetheless, the company is not authorized to trade its share publicly, this authority is granted only to a public limited company (Richter, 1999, 49-66).

Voluntary

A voluntary company corresponds to liquidation in the situation in which the shareholders apply to wind up the company while the company is still solvent - the directors may even have to make a statement to that effect. If it appears to the liquidator that the company will be unable to meet its debts, then they will call a meeting of the creditors and a compulsory liquidation will take place. It is concerned with resolution by the members of a company to appoint a liquidator to wind up the company. In a creditors' liquidation the company is insolvent. In a voluntary, or members', liquidation the company is solvent and the directors must make a declaration ...