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Business organizations

Business organizations belong to either the private or the public sector. The private sector consists of companies belonging to private individuals, and the public sector of companies owned by the government of the country.
There are various types of business organization which operate in the private sector:
A business run by a sole trader has just one owner, who is entirely responsible for all the company's business affairs. This type of organization has certain advantages and disadvantages.
A business run by a partnership has two or more owners. When entering into a partnership, an agreement is drawn up defining the rights, responsibilities and liabilities of each partner, such as how the profits are to be distributed and what part each partner is to play in managing the company. The partners may be active, meaning that they are actively involved in the company's business; or sleeping, which means they invest money in the company and receive a share of the profits, but do not concern themselves with the company's business affairs.
There are two types of partnership:
• General or ordinary partnership, where all partners have unlimited liability.
• Limited or special partnership, consisting of at least one general partner with unlimited liability and at least one limited partner whose liability is limited to the capital he has invested. The limited partners do not run the risk of losing their personal property if the company goes bankrupt, but neither do they have any say in how the business is run.
From a legal point of view, a joint-stock company counts as a separate person, which means that its shareholder (owners) and directors (the people chosen by the shareholders to run the company) only have limited liability. The shareholders each receive one dividend (part of the profit) per share. There are two types of jointstock company:
(a) Public limited company (plc)
The capital for this type of company is raised from members of the public. For this reason, a plc can be listed on the stock exchange, although it doesn't have to be. Before it can start doing business, a plc needs to have a minimum amount of share capital (in England for example, it needs to issue at least £50,000 worth of shares).
(b) Private limited company (Ltd.)
There are many more private limited companies than public limited companies. The shares of a private limited company are held by specially chosen persons or companies, which mean it can't be listed on the stock exchange. However unlike public limited companies, private limited companies don't need a minimum amount of share capital - it's theoretically possible for a private limited company to have just one share held by one person.