CS Executive: Setting Up of Business key terms

A business owned and run by one individual with no legal separation between owner and firm, so the owner is personally liable for all debts and keeps all profits.

An association of two or more persons who agree to share profits of a business carried on by all or any of them acting for all, governed by a partnership agreement.

A body corporate formed under LLP law giving partners limited liability while allowing internal management by agreement; it is a separate legal entity with perpetual succession.

The principle that a company is a legal person distinct from its members, shielding shareholders from company liabilities except where courts lift the veil for fraud or misuse.

A position where the owner's personal assets can be used to settle business debts, typical of sole proprietorships and ordinary partnerships, unlike shareholders of a company.

A person who conceives a business idea, arranges capital, assembles the management and takes the steps needed to bring a company into existence and set it running.

The document issued by the registrar confirming that a company has been registered, giving it legal existence from the date stated on the certificate.

The charter document of a company stating its name, registered office, objects, liability of members and capital, and defining the scope of its activities.

The internal rulebook of a company governing its management, board procedures, share transfers and meetings, subordinate to the memorandum and to applicable company law.

An agreement made on behalf of a company before it is registered; it is not binding on the company unless adopted after incorporation, and the promoter may be personally liable.

The collegial body elected by shareholders that directs the company's affairs, formulates policy and supervises management, acting collectively at duly convened meetings.

A non-executive director free of material pecuniary or personal relationships with the company, its promoters or management, appointed to bring objective judgement to board decisions.

The obligation of directors and officers to act in good faith, honestly and in the best interests of the company, avoiding conflicts of interest and misuse of position.

A contract or arrangement between a company and a director, promoter, key managerial person or their relative or associate, requiring disclosure and often prior approval.

A statutory or voluntary obligation on qualifying companies to spend a portion of profits on specified social welfare activities, reported and governed by the board.

The money or property contributed by shareholders in exchange for shares, divided into authorised, issued, subscribed and paid-up categories for accounting and disclosure.

A written instrument acknowledging a debt owed by a company to the holder, usually carrying a fixed rate of interest and often secured by a charge on assets.

A distribution of part of a company's profits to shareholders, declared by the board and approved as required, and payable only out of permitted profits or reserves.

The funds available for day-to-day operations, measured as current assets minus current liabilities, reflecting a firm's short-term liquidity and operational flexibility.

A financial statement showing inflows and outflows of cash classified into operating, investing and financing activities over a period, explaining changes in cash balances.

A statement of a company's assets, liabilities and equity at a given date, prepared in the prescribed format to show its financial position.

The two essential steps of contract formation: a definite proposal by one party and an unqualified assent by the other, together creating a binding agreement.

Something of value given or promised by each party in exchange for the other's promise, which is necessary for an agreement to become an enforceable contract.

An agreement that lacks legal enforceability from the outset, for example because its object is unlawful or essential elements are missing, so no rights arise under it.

A dispute resolution method where parties refer their differences to an appointed neutral tribunal whose award is binding, usually faster and more private than litigation.

A sign, word, logo or combination used to distinguish goods or services of one undertaking from those of others, protected by registration against confusing use.

An exclusive right granted for an invention that is new, involves an inventive step and is capable of industrial application, giving the owner a time-limited monopoly.

A bundle of rights protecting original literary, dramatic, musical and artistic works, and certain neighbouring rights, from unauthorised copying and exploitation.

Non-public business data such as trade secrets, customer lists or technical know-how that a recipient must not disclose or misuse, often protected by contract.

A mandatory yearly meeting of shareholders at which ordinary business such as adoption of accounts, appointment of auditors and declaration of dividend is transacted.

A periodic statutory filing summarising a company's shareholding, directors and other particulars as at a specified date, submitted to the registrar of companies.

A security interest created over a company's property or assets in favour of a lender, which must be registered within the prescribed time to be enforceable.

An independent professional appointed by shareholders to examine the company's accounts and report whether they present a true and fair view.

A young enterprise working to develop and scale a scalable business model or product, often eligible for simplified compliance and government incentive schemes.

Equity or quasi-equity finance provided to high-growth, high-risk young companies in return for a shareholding and often board rights and mentoring.

A support organisation offering early-stage ventures shared facilities, mentoring, training and access to networks to help them reach a viable, fundable stage.

A written document describing a venture's product, market, operating model, team and financial projections, used to guide execution and raise finance.