b Payment of shares every director of the company has paid for the companys

B payment of shares every director of the company has

This preview shows page 48 - 50 out of 63 pages.

b) Payment of shares: every director of the company has paid for the company’s qualifications shares. c) Submission of prospectus. The company has filed a prospectus or statement in lieu of prospectus with the registrar. d) Declaration regarding conditions. A statutory declaration by the secretary or one of the directors on the prescribed form that all the conditions have been complied with. 241. After verifying these foregoing documents, the registrar issues a certificate of commencement of business to public company .now this company is entitled to commence its business from the date of obtaining his certificate. 242. 243. DIFFERENCE BETWEEN PRIVATE LMTED COMPANY AND PUBLIC LIMITED COMPANY 244. At times some people get confused when it comes to private or public companies .as we discussed earlier that a private limited company can be started by a minimum of two persons .this can even be a sole trader who can get some relatives or friends to join him in business and form a company. It can even be a partnership business and they decide to convert it into a limited company. It is because of the protection of limited liability that comes from being a company. Therefore, small firms can gain the protection when the owner(s) create a private limited company. The word limited or ltd in short (put in some countries) tells us that the business has this legal form. Usually the shares will be owned by the original sole trader, relatives, friends and 48
Image of page 48
employees. The former sole trader often still has a controlling interest. New issues of shares cannot be sold on the open market and existing shareholders may only sell their shares with the agreement of the other share holders. Certain legal formalities must be followed in setting up such a business which has just been explained in this chapter. 245. When the business grows and the company needs to raise more capital to expand the business, it can convert itself into a public company. Therefore, a private limited company, which has been in existence for quite some time can become a public limited company. However ,there certain strict conditions to be followed such as getting permission from the capital markets authority , presenting the audited accounts showing good performance over the past few years and there are number of other legal requirements which a private limited company has to fulfill before converting into a public limited company. Also, it needs to win public confidence before they advertise their shares for the ipo (initial public offering), i.e. the first the shares are available to the public to buy. Nobody will want to invest their money in a company whose credibility is doubtful. In some countries such companies can be recognized by the use of letters ‘incorporated,’ respectively. 246. It is the most common form of legal organization for really large businesses, for the very good reason that they have access to very substantial funds for expansion. A public limited company has all the advantages of private company status plus the right to float their shares (shares for sale) and have them quoted on the stock exchange. This
Image of page 49
Image of page 50

You've reached the end of your free preview.

Want to read all 63 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes