- 10 Marks
Question
Asante, Oforiwaa, and Obrafour, who are well known to you and have been operating a Partnership for many years, have approached you for advice regarding their decision to convert it into a Public Limited Liability Company.
Required:
Explain FOUR (4) benefits that will be enjoyed by members of the Partnership should they convert it into a Public Limited Liability Company.
Answer
Benefits of Converting to a Public Limited Liability Company:
- Limited Liability:
The liability of members of a public limited liability company is limited. Thus, the owners are normally not personally liable for the debts and liabilities of the business apart from any personal commitments they might have made.
(2.5 marks) - Ease of Share Transfer:
A member of a public company can freely transfer his shares by trading them on the Stock Exchange without reference to other members.
(2.5 marks) - Capital Raising:
Shareholders of a public limited liability company can raise more capital by inviting the general public to subscribe for shares in the business. This option is not available to a partnership form of business.
(2.5 marks) - Unlimited Membership:
A public limited liability company can have as many members as it desires, unlike partnerships and private companies, which have ceilings on their membership.
(2.5 marks)
- Tags: Business Benefits, Corporate Structure, Partnership, Public Limited Company
- Level: Level 1
- Topic: The Business Organisation and its Stakeholders
- Series: MAR 2023
- Uploader: Theophilus