Question Tag: Business organization

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  • 6 Marks

BL – May 2015 – L1 – SB – Q2a – Company Law | Partnership Law

Explain three key differences between a partnership and a company.

A partnership and a company are similar in some respects, but they are different in many ways.
Required:
Explain any THREE differences between a partnership and a company. (6 Marks)

i. A company has a separate legal personality upon incorporation, while a partnership does not have a separate legal personality.

ii. Partnerships do not require a specific legal formality for formation, while a company must be incorporated with necessary documents.

iii. The liability of company members is limited to their shareholding, but partners in a partnership have unlimited liability except in the case of limited partners.

  • 10 Marks

BMIS – March 2024 – L1 – Q1a – The business organisation and its stakeholders

Explain five features of a Public Limited Liability Company to a friend considering investment options.

You have been approached by a high school friend for advice as to the form of business organisation in which he should invest. He indicates to you that he does not necessarily want to be directly involved in the day-to-day running of the business because he has family matters to attend to. You intend to recommend that he invests in a public limited liability company.

Required: Explain FIVE (5) features of a Public Limited Liability Company to your friend.

Features/Characteristics of Public Limited Liability Company

  • A public limited liability company is incorporated under the Companies Act 2019, Act 992. It is composed of not less than seven members. That is, the minimum number of persons who can form a public limited liability company is seven.
  • Due to the large number of members, the company can raise large amount of initial capital to operate on a scale larger than other forms of business units.
  • It can also invite the public to subscribe for shares, thus making it possible for the firm to raise additional working capital.
  • The company is regarded in law as a person distinct and separate from the members. It can acquire and own property in its own name.
  • The liability of members is limited which means that unless in very special circumstances, members are not liable for the debts and liabilities of the firm.
  • Because it is a public company, a member can transfer his shares without the consent of other members.

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