Cambridge AS A Level Business Studies/ ZIMSEC Advanced Level Business Studies/ Business Enterprise Skills Notes: Types of businesses: Limited Companies: Articles

  • We have already looked at the nature of limited liability companies and what makes them unique
  • Unlike Sole Trader business, companies require a lot of paperwork in order to create them
  • Only when all the required paperwork is completed can a company be incorporated and start operating
  • Some of the documents you need to be aware of include the following:

Memorandum of Association

  • It governs the relationship between the company and the rest of the world.
  • It states the name and address of the company,
  • its objectives, country of registration and
  • the name of the directors.

Articles of Association

  • They are known as The Articles of Association
  • It is a document which governs the company’s internal operations.
  • It details such matters as the name of the company,
  • the procedure for calling an Annual General Meeting,
  • the voting powers of shareholders,
  • the procedure and tenure of directors,
  • the responsibilities of directors,
  • The objectives of the company,
  • classes of shares,
  • dividend policies and liquidation procedures.

Certificate of Incorporation

  • Once the Registrar of companies is satisfied with the contents of the above documents
  • He issues the company with a certificate of incorporation
  • It is a legal document indicating that the state government has officially recognized a business or other entity as a corporation.
  • It is like a birth certificate to the company to which it is issued.
  • Once issued with a certificate of incorporation, a Private Limited Company can start trading immediately.
  • A Public Limited Company meanwhile has to issue a Prospectus.

Prospectus

  • A legal document in which a Public Limited Company invites the public to buy shares and invest in the business.
  • Once, it has raised enough capital a Public Limited Company is issued with a Certificate of Trading
  • This authorizes the business to start trading.

To access more topics go to the Advanced Level Business Studies page

To access more topics go to the ZIMSEC Business Enterprise and Skills page

To access more topics go to the Cambridge AS A Level Business Studies page

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