A Company Law Jargon Buster
Company law is full of confusing terms, and if you don't know what they mean then settung up a company can start to look far more scary than it really should be. Read through this jargon buster and you should find it much easier to understand what starting up is all about. Capital. This is money that is going to be invested in a business. Example: 'I am starting my business with $5,000 capital, $2,000 of which is my own'. Contract. When you sign a legal document, you are entering into a contract. Starting a business lets you sign and enter into contracts on behalf of the business — the contract will be between the other person and your company, not you. Director. The people ultimately in charge of a company are its directors. For a large company, there will be a boards of directors, appointed by the shareholders. For a home business, though, you can appoint yourself as the sole director since you are also the sole shareholder (see 'shareholder'). Incorporation. This is the formal name for the process of starting a company. Example: 'My business was incorporated in March 2000'.
Insolvency. When a company cannot afford to pay its debts. The type of company you have set up will affect what happens in this situation — you may be liable for all of the debt yourself, or for none. Limited liability. A limited liability company is one where you agree beforehand how much responsibility you will take if anything goes wrong. This protects you from being destroyed financially if something bad happens to your business. Office. Your company's 'office' isn't just a place with computers — it's also a legal concept, meaning where your company is based. Your company must have a registered office, which means that you can't start a company unless you have an address which would be legal to use for this purpose. Private. A home business will be private, which means that members of the public cannot invest by buying shares. This does not stop individuals from buying percentages of your company if you are willing to sell, though. Starting your company as a private one also doesn't stop you from converting it to a public one later on. Proxy. Someone who acts as a proxy for you acts on your behalf — you have given them the legal right to speak for you.
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