Introduction to Companies and Shareholders

Which statement best describes a company as a separate legal entity?

• It is only a trading name without structure

• It merges with its owners’ personal assets

• It exists independently from its owners

• It cannot enter contracts or be sued

Who are the owners of a company?

(a)  

A Private Limited Company (Ltd) is most likely to have which characteristic?

• Must list on a stock market to operate

• Ownership open with minimal restrictions

• Shares widely sold to the general public

• Shares not traded on public exchanges

Explain one key difference between a Private Limited Company (Ltd) and a Public Limited Company (PLC) and why that difference affects how shares are bought and sold.

An investor wants to understand why share prices change. Outline a simple process showing how buyers and sellers interact to set the price.

Which statement best distinguishes a private limited company from a public limited company?

• Requires minimum share capital of £50,000

• Usually has many dispersed shareholders

• Shares freely traded on stock exchanges

• Privately owned with restricted share trading

Fill in the blank: A public limited company must have a minimum share capital of (a)   .

An entrepreneur wants quick setup with low administrative cost and plans to keep ownership among a few partners. Which company type is the better fit, and why?

Which statement best describes dividends for shareholders?

• Regular payments funded from earned profits

• Guaranteed payments regardless of company profits

• One-time payments only when shares are sold

• Payments based on total company market value

Capital growth is only realised when a shareholder does what?

• Votes at the annual meeting

• Sells the shares at a price

• Receives a special dividend

• Holds shares over three years