A private limited company is formed when 1-99 people come together to start a business. They are shareholders who invest money in the company. A private limited company has "Ltd." after its name and sends annual accounts to the Registrar of Companies but does not publish them. Advantages include shareholders having limited liability, ability to raise extra capital, and continuity of existence. Disadvantages are setup costs, legal requirements, and inability to transfer shares publicly. To form one, promoters hire an accountant and solicitor who complete a Memorandum of Association, Articles of Association, and Form A1 to send to the Companies Registration Office. If in order, a Certificate of Incorporation is issued,

1. Forming a Private
Limited Company
Forms of Business Ownership

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?