WebDesPix Ltd (WDP)

WALT: Advantages and disadvantages of its

type of ownership. Possible reasons for change of

ownership.

Private Limited Company

Definition of a (LTD)

WDP is a private limited company that is run by its shareholders, but these shareholders are made up of only family and friends (Tom, Dee and John). Shares for WDP are not available to the general public and are not sold on the stock exchange.

How WDP was set up

Step 1 – A memorandum of association and articles of association was prepared.

Step 2 – These documents were sent to the registrar of companies

Step 3 – The registrar of companies issued a certificate of incorporation which allowed WDP to start trading.

Advantages and Disadvantages of WDP’s type of ownership.

It can raise capital by issuing (selling) shares. The owners have limited liability. WDP has its own legal identity Money can be raised by selling shares to their

friends and family. The person that originally set up each

company can lose control of the business. WDP cannot sell shares on the stock market. Annual reports have to be produced by law.

Reasons why WDP might change ownership

1. Growth of the business

2. To raise extra capital

Growth/decline of the businessGrowth/decline of the business

As WDP grows it will need new sources of capital and it may need to change its legal structure.

Obtaining financeObtaining finance

As a public limited company (Plc) WDP will be able to raise considerably more capital than a private limited company (Ltd).

Changing to a Public Limited Company

Definition of a (PLC):

A public limited company is a business that is run by shareholders, the shares can be bought by any one, and its shares can be bought on the stock exchange.

Industrial sectors

Industrial sector that WDP operates within.

What sector does WDP operate?

WDP provides web design, electronic newsletters, domain registration, hosting and engine search optimisation services. They therefore operate within the tertiary sector.

This is where finished product can be sold. This sector provides both goods and services.