The most popular model of doing business in the western world is by way of the Limited Company. Many of these companies are large corporations and have their shares listed on Stock Exchanges. In the UK, they have the suffix 'plc' after their name and this indicates that the shares are publicly traded.
The more modest limited company has the same structure as the plc, except that the shares are not publicly available for sale. Such a company is often referred to a private limited company.
Many overseas businessmen who want to start a business in North Cyprus may not have traded by way of a limited company in their previous commercial activities.

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A limited company in both North Cyprus (TRNC - Turkish Republic of North Cyprus) and elsewhere can have several categories of shares. These are -

1. Ordinary Shares. This is the most popular form of shares, and they have no special rights or restrictions. They may be divided into different classes of different values. In North Cyprus it is customary to have the shares issued as 1 Turkish Lira each.

2. Preference Shares. As the name suggest, this class of shares has priority in the distribution of company profits or annual dividends. Some preference shares provide a fixed dividend that is guaranteed regardless of the performance of the company. In the event of the company winding up, these shares have a priority call on assets.

A limited company has many advantages, and these include -
1. The liability of the shareholders is limited to the amount of share capital they invest in the company.
2. The Directors can be separate from the shareholders, and will normally draw a salary or fees on which tax is payable. However, they have no liability for the debts of the company provided that there is no malpractice on their part.
3. Directors can also be shareholders, and new directors can be appointed to enlarge the management structure of the company.
4. The share capital can be enlarged to accommodate new investors, or shares can be sold in order to transfer ownership.
5. The company is a separate legal entity from the directors and shareholders and can enter into obligations in its own right. This includes opening a bank account, employing staff, entering into contracts, buying and selling goods and services.

There is a popular misconception that directors can easily become liable for the debts of a company or can be sued or even prosecuted if they are careless, negligent or just plain stupid. Regulators in most jurisdictions use a very light hand to administer company regulations, and, unless malpractice is proven, directors have a great deal of freedom in how they operate.

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