Types of Business and ownership.

Type of Business

There are different methods of classifying a business and one method is by sector. Businesses have traditionally been split in to two sectors, public and private sector.

Public sector

This sector comprises government owned or government controlled bodies including:

Public corporations as the Post office
Government departments
Local authorities such as the police and fire dep.

Private sector

This sector comprises businesses that are directly or indirectly in private ownership. This sector accounts for most businesses operating within the UK. Private sector businesses include:

Sole traders (one person businesses)
Partnerships (groups of people in a business)
Co-operatives (groups of people ‘clubbing’ together for a specific purpose e.g. A farmers co-operative set up for producing and selling grain)
Franchise operations (where a trader can ‘buy’ a name and set up a bushiness which is already established and used by other independent operators)
Limited companies (a limited company is a body owned by shareholders set up to do business.

The Bank of Cyprus (London) Ltd comes under the private sector, as the company is privately owned.

Ownership

Another method of classifying a business is by ownership. As I mentioned above, there are different types of ownership in a private company. The Bank of Cyprus (London) Ltd is a limited company.

Limited company

A limited company is a business

Owned by shareholder
Run by directors
Set up as a body which is separate from its owners (the shareholders)

Limited companies can range from small family businesses, to large businesses which has thousands of ...

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The Bank of Cyprus (London) Ltd comes under the private sector, as the company is privately owned.

Ownership

Another method of classifying a business is by ownership. As I mentioned above, there are different types of ownership in a private company. The Bank of Cyprus (London) Ltd is a limited company.

Limited company

A limited company is a business

Owned by shareholder
Run by directors
Set up as a body which is separate from its owners (the shareholders)

Limited companies can range from small family businesses, to large businesses which has thousands of shareholders. One feature of a limited company is that they have limited liability. If a limited company has debts, the owners can only lose the money they have invested in the firm. They cannot be forced to use their own money like sole traders and partners to pay debts.

The capital of a limited company is divided into shares. Each member or shareholder owns a number of these shares. They are joint owners of the company and can vote to take a share of the profit. Those with more shares will have more control and can take more profit.

Limited companies are run by directors who are appointed by the shareholders. The board of directors, headed by a chairperson, is accountable to shareholders and should run the company as the shareholders wish. If the company’s performance does not live up to shareholders’ expectations, directors can be ‘voted out’ at an Annual General Meeting. Whereas sole traders and partnerships pay income tax on profits, companies pay corporation tax.

A limited company will either be:

A public limited company (Plc), or
A private limited company (Ltd

Public limited companies (Plc)

This type of limited company tends to be larger than a private limited company. There are around 500,000 limited companies in the UK but only 3% are Plc’s. However, they contribute far more to national output and employ far more people than (Ltd) companies.

The main difference between a PLC and a private limited company is that a PLC can sell its shares on the Stock Exchange to members of the general public and can, therefore, raise significantly more finance than a private limited company.

Private Limited Company (Ltd)

This is a type of joint-stock company (that is, it is an incorporated business – where the business has a separate legal identity from the owners). Often private limited companies are small, family run businesses which are owned by shareholders.

The Bank of Cyprus (London) Ltd is a Private limited company.

Each shareholder in the bank of Cyprus MUST be a part of the business and under no circumstances can any shares be sold to members of the general public. Each share entitles the owner to 1 vote at the company’s Annual General Meeting (A.G.M.) and also to a share of the company’s profit at the end of the financial year (a dividend).

Each shareholder has limited liability for the company’s debts and can, therefore, only lose the value of their investment in the company. The Bank of Cyprus is run by a Board of Directors (who are elected by the shareholders) and this is headed by a Chairman.

Here are some of the directors of the Bank of Cyprus (London) Limited:

Directors

C S Pantzaris – Chairman
G C Christofides
T N Clarke
F E Jones
S J Neophytou – General Manager
G S Papadopoulos
S A Triantafylides
P D Willison
E Xenophontos

There are a number of advantages and disadvantages of being a private limited company.

Advantages:

Shareholders have limited liability. As a result more people are prepared to risk their money than in a partnership, for example.
More capital can be raised as there is no limit on the number of shareholders
Control of the company cannot be lost to outsiders. Shares can only be sold to new members if all shareholders agree.
The business will continue even if one of the owners dies. In this case shares will be transferred to another owner.

Disadvantages:

Profits have to be shared out amongst a much larger number of members.
There is a legal procedure to set up a business. This takes time and also coasts money.
Firms are not allowed to sell shares to the public. This restricts the amount of capital that can be raised.
Financial information filed with the Registrar can be inspired by any member of the public. Competitors could use this to their advantage.
If one shareholder decides to sell shares it may take time to find a buyer.