Shareholder Someone who invests capital in exchange for a part ownership in the company

Mutual A business jointly owned by all of its members and existing for the benefit of its members rather than making a profit

Unincorporated A business which is not registered with companies house.

Market Capitalization The current value of a company calculated by share price x number of shares issued.

Private Limited Company A business owned by shareholders which cannot sell shares on the stock market.

Dividend A share of profits allocated to shareholders

  • Charity
  • Unlimited
  • Public
  • Stock Exchange


In the private sector, there are businesses owned by private individuals. These include sole traders, partnerships and private and public limited companies. Companies are incorporated meaning that they become a separate legal entity from the owners, can sue and be sued in law and the owners of shares have limited liability meaning they can only lose the amount they invested in the business. Unincorporated businesses like sole traders and partnerships have unlimited liability, which means that the owners can lose personal assets in the event of failure.


READER LOST Sole Trader KART ME ANTIPASTO CILIA Market Capitalisation I DID VEND Dividend HERALD HORSE Shareholders

Virgin group may have wanted to be a private ltd when diversifying into new areas, because they would be protected from liability but not quite as vulnerable as a plc could be.

Investment into R+D can be risky, as it uses lots of company funds and comes with high risks. Reduces profit.

Share prices are determined by what people think the value of the business is. So a profit warning equals reduced dividend payments and business stability - therefore lower business value.

  1. If you start a business without limited liability, and you make a mistake, then you have no protection against anything that happens. You could end up in debt and with your personal assets at risk. Limited liability is a simple way to separate yourself from your business and create that legal barrier between the two entities.
  2. A private limited company and a public limited company are similar in many ways. However, they start to differ at the point where a plc has shares floated on the stock market, whereas a private limited company requires shareholders to be invited. A public company has additional requirements when it comes to publishing accounts and handling additional paperwork (although a private company most definitely still has paperwork). Public limited companies are much more visible to the public, and news outlets will report on their profit filings and activities much more closely. This means that a public limited company will have to be much more careful about their activities than a private one.
  3. A private limited company does not need to publish its accounts, whereas a public limited company does. This is an advantage to setting up as a private ltd, because it means that your financial data is more secure. You will be able to protect information about your cash flow from the public, meaning that it will have a minimal impact on your business. This also enables a business to be more effective at competing with other businesses in the same market, because they will not be sharing their performance information - meaning that they have more room to outwit their competitors.