ZIMSEC O Level Commerce Notes: Terms used in business organisations
- 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.
- 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.
- 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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