- 10 Marks
Question
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.
Answer
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.
- Topic: The Business Organisation and its Stakeholders
- Series: MAR 2024
- Uploader: Theophilus