Formation of a Private Limited

Company

Objectives At the end of this lesson,

students should be able to…. Complete a Memorandum of

association List private limited companies

within their locality Talk about Articles of Association

and form A1

Robertinos LTD. Wexford transport LTD

Form A1 Includes; Company name,

address, and sectary Details about

directors including their occupations

Signature of each director to show that they will run company properly ( Declaration of Compliance

Memorandum of Association

External Rules of the company

Name of the company Objectives : What the co.

does Statement of Limited Liability Statement of Authorised

Share Capital (Number of shares they can sell)

Signatures of directors Sent to Companies

Registration Office

Articles of Association Internal Rules of co. Name of company Rules for meetings Voting rights of

shareholders Rules for election of

directors Borrowing power of the

company Sent to registrar of

companies

Certificate of Incorporation Birth Certificate of the

company Include company

registration number Means that company is a

separate legal entity Company can sue and be

sued in it’s own name Received from registrar of

companies

Summary of Company DocumentsMemorandu

m of Association

Articles of Association

Form A1

RegistrarOf

Companies

CertificateOf

Incorporation

Recording the Share Capital in the Accounts

Debit Bank A/C

Credit Share Capital A/C

Record €100,000 Share Issuein the Books of First Entry

BANK A/C

Date Details F Total Date Details F Total1/1/08 SHARES GL 100,00

0

SHARE CAPITAL

A/C

Date Details F Total Date Details F Total1/1/08 BANK CB 100,00

0

What is Share Capital? When you need money to start

your company you can sell shares to people.

A shareholder is willing to invest money in the business to obtain part ownership of the business and also to share profits (dividends)

Distinguish between

Authorised Share Capital

Maximum amount of shares you are allowed to issue/sell

Issued Share Capital

Actual amount of shares you have issued/sold

AGM Annual General Meeting. By law every company

should hold one All shareholders must be

invited to attend the meeting.

AGM’s give shareholders an opportunity to hear how company is performing

At this meeting the directors will decide how much of the profits are paid to be shareholders(Dividened)

Recap of Key Terms Mem of Assoc. Articles of Assoc. Cert. of Incorporation Shares Dividends Authorised Share Capital Issued Share Capital

Co-operatives

Forms of Business Ownership

What is a co-operative? A co-operative is a business owned and

run by its members who have a common bond

To become a member a person must buy at least one share

Each member has one vote The profit is distributed among the

members Members have limited liability Co-ops are managed by a management

committee

Formation of Co-ops Seven people are required Apply to the Registrar of Friendly

Societies Certificate of Incorporation is

issued The co-op must report annually to

the Registrar of Friendly Societies

Types of Co-ops Producer Co-ops – mainly agricultural

co-ops. They collect the raw material from the farmers, e.g. milk, process it and sell the finished product, e.g. cheese

Types of Co-ops Retailer Co-ops – these co-ops buy

directly from the manufacturer and sell to members

Types of Co-ops Worker Co-ops – are set up where

businesses close down and the workers decide to pool their money and set up a co-op, e.g. Carrigdhoun Pottery, Greencaps (Dublin Airport)

Types of Co-ops Financial Co-ops, e.g. credit unions –

set up by people sharing a common interest, e.g. live/work in the same area. They encourage saving and provide loans

Advantages of Co-ops Members have limited liability One vote per member The members own the co-op,

which is a big incentive to do business with the co-op

Profits are distributed among the members

Disadvantages of Co-ops Lack of finance No incentive to buy more shares The management committee may

not have the business expertise to run a modern business

Summary What is a co-op? How is a co-op formed? What are the advantages and

disadvantages of a co-op as a form of business ownership?

Outline the different types of co-ops in existence in Ireland