Terms used in business organisations

“Private”

• Membership to a private limited company is by invitation.
• Shares of a private limited company are onlys sold to invited members for example friends and relatives.
• Shares cannot be sold or bought on the Zimbabwe Stock Exchange or transferred publicly.
• Financial records of a private limited company are not made available for public inspection, perusal or consumption but are submitted only to the Zimbabwe Revenue Authority for tax purposes.
• A private limited company is usually a family owned business.

“Public”

• Membership to a public limited company is open to members of the public.
• Membership is by public invitation through a prospectus or advertisements placed in newspapers.
• Shares of a public limited company can be bought, sold or transferred publicly through the Zimbabwe Stock Exchange.
• Audited financial records are published in the newspapers.

Stocks

• Sold by government or local authorities to members of the public.
• These are government shares, which are sold in bundles of 100 shares or multiples thereof.
• Gilt-edged securities.
• A very secure form of investment backed by government.

Annual General Meeting (AGM)

• A legal requirement for limited companies under the Companies Act.
• Must be attended by all shareholders or by proxy.
• Held once a year.
• Where a Board of Directors are elected decisions are made.

Board of Directors

• Must hold ordinary shares in order to be elected.
• They control the business.
• Elected at an Annual General Meeting.
• Responsible for the day to day running of the business through the managing director.
• The managing director reports to the board.
• Powers are stated in the articles of association.
• Composed of 2 to 6 members.
• Draws up the policy of the company.
• Powers and limitations are stated in the articles of association of the company.
• Members may or may not be shareholders.
• Board chooses the managing director.
• Members of the board are elected by the shareholders at an Annual General Meeting.

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