Section 9Objective 1

Features and Principles

Identify the essential features of limited liability companies, cooperatives and non-profit organisations

Limited liability Company (LLC) or Corporation

Limited liability company or corporation Features

– Any company whose capital is broken up into small amounts called shares or stocks

– Shares or stocks are sold to the public or to close friends– Holders of shares are called shareholders or stockholders – Limited companies are incorporated entities. They have

separate legal entity for its shareholders– In the event the company goes bankrupt, shareholders

will only lose the amount invested in the company (and not their personal property)

Limited liability company - Features

• They all have either Ltd, Plc or LLC after their names– The shareholders or stock holders are part owners of

the business– Corporations pay corporation tax – Shareholders pay personal taxes on profits (dividends)

earned in the business

Limited liability company - Principles

– Limited companies may be either private or public

Private liability company

– Private liability company• Shares in this company cannot be sold to

the public• They are not traded on the stock exchange• The shares are bought and sold privately

(by consent only)• The sale of shares is limited to only close

friends, family, business partners and maybe employees

• The company has few shareholders• The title ‘Ltd’ appears after the company’s

name

Public liability company

• Shares in this company are sold or traded on stock exchanges to the public• There are no restriction on the issue

of shares • Shares are transferable• The company has infinite life• The company has many shareholders• Company is managed by an elected

board of directors• The title ‘plc’ appears after the

company’s name