Formation of a Private Limited Company Memorandum of

Formation of a Private Limited Company

Memorandum of Association n n n External Rules of the company Name of the company Objectives : What the co. does Statement of Limited Liability Statement of Authorised Share Capital (Number of shares they can sell) Signatures of directors Sent to Companies Registration Office

Articles of Association n n n Internal Rules of co. Name of company Rules for meetings Voting rights of shareholders Rules for election of directors Borrowing power of the company Sent to registrar of companies

Certificate of Incorporation n n Birth Certificate of the company Means that company is a separate legal entity Company can sue and be sued in it’s own name Received from registrar of companies

Summary of Company Documents Memorandum of Association Articles of Association Form A 1 Registrar Of Companies Certificate Of Incorporation

Recording the Share Capital in the Accounts n Debit Bank A/C n Credit Share Capital A/C

Record € 100, 000 Share Issue in the Books of First Entry BANK A/C Date Details F Total 1/1/08 SHARES GL 100, 000 Date Details F Total SHARE CAPITAL A/C Total Date Details F Total 1/1/08 BANK CB 100, 000

What is Share Capital? n n When you need money to start your company you can sell shares to people. A shareholder is willing to invest money in the business to obtain part ownership of the business and also to share profits (dividends)

Distinguish between Authorised Share Capital n Maximum amount of shares you are allowed to issue/sell Issued Share Capital n Actual amount of shares you have issued/sold

Recap of Key Terms n n n n Mem of Assoc. Articles of Assoc. Cert. of Incorporation Shares Dividends Authorised Share Capital Issued Share Capital