yoffice

1. Forming a Private Limited
Company
Forms of Business Ownership
Yoffice

2. What is a Private Limited Company?
• A private limited company is where between one and
ninety nine people come together and form a business
• The owners are called shareholders and they invest
money in the company
• The profit is divided up among the shareholders and
distributed in the form of dividends
• “Ltd.” is written after the name of the company
• The annual accounts are sent to the Registrar of
Companies. They are not published

3. Advantages of a Private Limited
Company
• Shareholders have limited liability
• Extra capital is available to fund expansion of
the business
• Continuity of existence

4. Disadvantages of a Private Limited
Company
• Costly to set up
• A lot of legal requirements when forming a
company
• Shares cannot be transferred to the general
public

5. Forming a Private Limited Company
Promoters
PromotersSolicitor
Hire…
Who completes…
Form A1
Memorandum of Association
Articles of Association
Companies
Registration
Office (CRO)
Sent to…
Certificate of
Incorporation
Now the
company can
begin trading

6. Board of Directors
Managing Director/
Chief Executive Officer
Shareholders
IT
Manager
Marketing
Manager
Finance
Manager
Production
Manager
Elect…
Appoint…
The owners of the
company (1-99)
The people elected to run
the company (max. 12)
The MD/CEO runs the
company on a daily basis with
the assistance of the department
managers

7. Forming a Private Limited Company
• You need 1 – 99 people who invest money and are
shareholders
• The people involved in forming a company are called
the promoters
• The promoters employ:
– An accountant – for financial advice
– A solicitor – to prepare the legal documents which must
be sent to the Companies Registration Office (CRO)

8. What documents must be filled out?
• Memorandum of Association – sets out the relationship of the
company to the general public, i.e. rules and regulations
governing how the company deals with the public
• Articles of Association – sets out the internal rules and
regulations of the company, e.g. shareholders voting rights, how
directors are elected, powers and duties of the directors
• Form A1 – sets out the details of the company, it’s directors and
their signatures (Declaration of Compliance with the Companies
Acts 1963 – 1990)

9. • These documents are sent to the Registrar of
Companies
• The Registrar will check to see if they are all in order
• If so, a Certificate of Incorporation is issued
– This is the birth certificate of a company
– It has a separate legal existence from its owners
– The shareholders have limited liability
– The company can sue and be sued in its own name

10. Memorandum of
Association
Articles of
Association
Form A1

11. Board of Directors
• When the company is incorporated it will hold
a meeting of its shareholders who elect a
board of directors to run the company on a
day-to-day basis
• They report to the shareholders annually on
the performance of the company at the
Annual General Meeting (AGM)

12. Summary
• What is a private limited company?
• How do you know if a business is a private limited
company?
• Can you list three advantages and three
disadvantages of operating as a private limited
company?
• What documents are needed to form a private
limited company?
• What is the certificate of incorporation?
• What do the board of directors do?
• What is an AGM?