Law short and clear Summary.

Law short summary
Public limited company, a company that is divided in shares, that can be bought by anyone
 Crowdfunded
 Traded a stock exchange and can be bought and sold by anyone.
 Strictly regulated
 Required by law to publish their complete and true financial position so that investors can
determine the true worth of its shares.

 Capital divided in shares: shares are anonymous and freely tradable (stock market)
 Supervisory and management board

Pro’s
 Handy if you want to go worldwide
 Expand fast and at a large scale by issuing shares

Con’s
 High costs to start
 Lot of rules
 Public books, the competition can see how much profit or loss there is
 There is a distinction between supervisory and management board. Interest might conflict and
makes it less flexible and slower.
 Not suitable for starters

Private limited company: divided into shares that are owned by shareholders, cannot be bought by
anyone.
 Shareholders hold ultimate power
 Company directors run the business on a day-to-day basis.
 May appoint a supervisory board to monitor its board of directors, but this is not compulsory.
 Limited liability: can separate assets, if one is bankrupt the others can continue

 Capital divided in shares: shares are named, not freely tradable
 The board of directors decides who can buy shares. That gives more control

Pro’s
 Easier to start up
 Cheap to start up
 Suitable for starters

Con’s
 Smaller resources
 More expensive and time consuming to set up
 Expanding is harder and slower.

Structure of a corporation
Company exists of shareholders: they own the stocks, so they own the company
 Don’t run the business
 Can make decisions on change of articles, structure etc
 Right to dividend/info etc

, CEO is the managing director and the face of the company
 Heart and soul of the company
 Communicator between stakeholders

Executive/management board are the ones that run the business
 Persons that are liable
 Leaders of the company
 Hands & feet of the company

Supervisory board are shareholders that keep an eye on the management and CEO
 Eyes & ears

Board of directors are the supervisory and management board together
 Chosen and appointed by general shareholders meaning

Corporate governance: set of relations between company’s management, board, shareholders,
stakeholders.
 Provides structure
 System of transparency, accountability and power balance
 Monitoring the system

Operational forms
Management contract: a contract between a management company and an owner. The company
operates the company but the owner pays for it.
 Advantage: Individual design, professional team, possibility
 Disadvantage: loss of control, conflict of interest

Franchise: agreement between franchisee and franchisor. The franchisor grants its resources, brand
image etc. to the franchisee for a certain fee.

Franchisor
 PRO: fast expansion possible, easy way to expand capital, control is in your own hands
 CON: franchisees can damage the chain’s reputations, you will share the profit, you need a solid
profitable plan or product to attract franchisees.

Franchisee
 PRO: solid business plan, more support, known brand name, less investment
 CON: loss of freedom, franchise free, strict rules, not flexible, franchisor dominant

Referral group: independent companies which have grouped together for some common purpose.
 Only working together on marketing level.
 Own brand and style.
 Share costs, reservation system, they refer each other and promote each other.
 PRO: a network, shared marketing, an umbrella but prefers own identity, you have help
 CON: costs money, more competitor under same brand, little bit less freedom: you have to
comply to marketing strategy that the referral organization offers.