Private Limited Companies

We will look at:• Revision of Private Limited Companies• Documents required to set up a Private Limited Company• AGM’s

Private Limited Companies

What do we already know?

As we have learned from our last chapter, Private Limited Companies are:

1. Businesses set up by groups of people with a minimum of 1 and a maximum of 50 shareholders

2. The business has LIMITED LIABILITY- What does this mean?3. The total money invested is called capital4. Profit on each share is called a dividend5. The name of a Private Limited Company is followed by the letters

‘Ltd’6. Each shareholder has one vote for every share they own

How is a Private Limited Company is Formed?

• The following legal documents must be prepared and sent to the Registrar of Companies

Document 1

1. Memorandum of Association- The external rules of the company.It contains: 2. The name of the company with the letters Ltd after it3. The objectives of the company (i.e. what the company was set up

to do)4. The capital of the company, i.e. the authorised share capital5. That the company has limited liability

Document 2

2. The Articles of Association- The internal rules of the companyIt contains:

1. The name of the company

2. The share capital of the company

3. The voting rights of shareholders4. How the directors are to be appointed5. Powers of directors6. How meetings are to be called7. The procedure for closing the company

 

Document 3

3. Declaration of Compliance- This simply states that the company will obey the law.

We, as directors of ABC Ltd agree to comply with the requirements of the Companies Act

Signed: Dated:

 

Document 41. Certificate of Incorporation

This is like the birth certificate of the company.

Document 5

5. Statement of the Nominal Share Capital

The nominal share capital is the maximum amount of capital a company can raise by selling shares.

AGM (Annual General Meeting)

• A company is then obliged by law to hold a meeting of all shareholders once a year. This is called an AGM or Annual General Meeting.

It will detail events such as:

A report on company performance

If required, new directors are appointed

• Annual accounts are presented