Introduction to Limited Company
Limited companies can range in size from relatively small to very large. Some individuals who subscribe capital and become the owners might be limitless that gives the opportunity to form a very large-scale business. Though the liability of owners is limited (therefore 'limited' company), that means that those individuals that are subscribing capital to the company are liable just for debts acquired through the company up to the amount that they have fixed to invest. This limit on the liability of the owners is intended to limit risk and to create greater confidence to invest.
With no such limits on owner liability, it is hard to see how a current capitalist economy could operate. In several cases, the owners of a limited company are not included in the everyday running of the business and thus will invest in a business only in the condition that there is a clear limit set on the level of investment risk. Though, the advantage of limited liability imposes specific obligations on such companies. To begin a limited company, documents of incorporation have to be ready that set out, between other things, the aims of the business. In addition, a framework of regulations that are existing places obligations on limited companies regarding the way wherein they carry out their affairs. Element of this regulatory framework needs yearly financial reports to be made available to owners and lenders and generally an annual general meeting of the owners has to be conducted to approve the reports.
Additionally, a copy of the annual financial reports has to be lodged with the Registrar of Companies for public inspection. According to this way, the financial affairs of a limited company enter in the public domain. Along with the exception of small companies, there is too a need for the annual financial reports to be subject to an audit. This includes a self-governing firm of accountants examining the yearly reports and fundamental records to see whether the reports give a true and fair view of the financial health of the company and whether they fulfil along with the appropriate accounting rules established through law and through accounting rule makers. Every large household-name UK businesses (Marks and Spencer, Tesco, Shell, BSkyB, BA, BT, easyJet and so on) are limited companies.
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