Private company. The structure of the authorized capital. risk of a take-over

Types of bissenes

The basic economic institution in different economics systems is the business, Businesses determine much of how the economy operates. Businesses produce goods and services, and they come in every shape and size. Although the vast majority of the world’s companies are small, in many countries the economy is dominated by large firms. Large business differ from small ones in a wide variety of ways.In many countries there are nationalized companies belonging to the state, as well as private companies.A private company might be a small firm with just one owner or a very large firm with thousands of shareholders “ownig” he firm.
We can say that sole proprietorships and partnerships are small businesses.
Starting a business requires more than natural resources, labor, and capital.An entrepreneur must organize these resources.Many entrepreneurs start their own business as sole proprietorships.A sole proprietorship is a one –owner business.The advantages of sole proprietorships (they are easy to organize, decisions can be made quickly, owners receive all profits, etc.) explain why so many people start business and try to run them alone.However, a sole proprietor sometimes encounters difficult problems in starting a business.One person has limited resources to start and operate a business.The owner has only personal savings and funds that can be borrowed.Because capital is lacking, most sole proprietors begin small and fill.Even those that succeed often stay small.
A sole proprietorship also must deal with the problem of unlimited liability.According to the law, the owner and the business are one and the same.If the business fails, the owner must pay the debts.The personal property of the owner, such as a home or a car, can be taken to pay the debts of the business.No limit is placed on the amount the owner can lose.High profits can make an owner wealthy, but high losses can ruin an individual.

private company. The structure of the authorized capital. risk of a take-over.

A private company can be formed by two or more people. They sign a Memorandum of Association, stating the number of shares they agree to take, their signature is followed by a signature of another shareholder.

In a private company there cannot be more than 50 members, or shareholders. Each share carries a vote at the shareholders’ meeting.

The authorised capital consists of market value of all the shares issued.

If any person owns 51 per cent of the shares he would have a controlling interest, & would be in a good position to take over the firm. Person owning a large proportion of the shares could ask to join the Board.

H&G is a private company. The balance of power was upset after Ambrose Harper’s death. Wentworths, a large & successful firm, owining 10 per cent of H&G shares, had an opportunity of baying some of the shares belonging to Harper. If Wentworths owned 51 per cent of the shares they would be in a good position to take over H&G, making it a fully owned subsidiary.

Grant & Peter’s mother owned 20 % of the capital each & 50% after AH’s death came to form a trust (40%) & to his sister Caroline (10%). Caroline had got a very generous offer to her shares from the Wentworths. She couldn’t sell her shares without offering them first to the other shareholders.

Hector Grant was personally jealous of Alfred Wentworth & didn’t want him to own the controlling interest of the shares. He raised a personal short-term loan so that to postpone the possibility of a take-over by baying 250 shares (5%) in the company.

3. Private company: Raising and granting loans. (Harper & Grant Ltd. overcomes the risk of a take-over and ensures the favourable redistribution of the share capital).

Harper & Grant is a private company. It was started originally by Hector Grant's father and the late Ambrose Harper together. A private company can be formed by two or more people.
Hector Grant is personally jealous of Alfred Wentworth and does not want him to own too many of the shares. He raises a loan, that is, he arranges with the bank to lend him money to buy enough of the shares to outvote Wentworth's. It is a personal loan. It is also a short-term loan. He does not only have to pay back the money he borrowed, he also has to pay interest on it: in this case nine per cent, this is the rate of interest. The bank manager asked for security. He wanted to hold the deeds of Grant's house. But a building society lent him money long ago to buy the property, and every year he repays a proportion of the loan to them, plus interest. By now, a lot of this loan has been paid back to the building society. Probably for this reason the bank agreed to a second mortgage.

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