Limited company features, share capital and reserves, and the appropriation of company profit.
A limited company is a separate legal entity owned by shareholders and run by directors; shareholders have limited liability.
Share capital and reserves
- Ordinary shares — owners; receive dividends that vary with profit; carry voting rights.
- Preference shares — fixed dividend, paid first, usually no votes.
- Reserves: retained earnings (profit kept in the business) and the share premium (amount received above nominal value).
- Debentures — long-term loans (interest is an expense, not a dividend).
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