Question Tag: Legal Structure

i) Public Limited Liability Company:
A public limited liability company is a company formed by a large number of people, usually called shareholders, with a minimum of seven shareholders. The liability of members is limited to any unpaid amount on shares issued to them. The company is recognized as a separate legal entity from its owners, meaning it is responsible for its own assets and liabilities. Shares of the company can be freely transferred by a shareholder without the consent of other members, and the company can invite the public to buy shares in the entity.
(4 marks)

ii) Features of a Private Limited Liability Company:

1. Ownership: Shareholders of a private limited liability company range from a minimum of two to a maximum of fifty persons, with the exception of banks where the maximum is ten people.
2. Legal Status: The company has a separate legal personality from its owners or shareholders, allowing it to acquire and own assets, sue, and be sued in its own name.
3. Transfer of Shares: The shares of a private limited company cannot be transferred by a shareholder without the express consent of other members.
4. Source of Capital: Since the company cannot invite the general public to subscribe for shares, additional capital must be raised through contributions from the owners.
5. Privacy: The financial records of the company are not open to public inspection, and the company is not required to publish its accounts in national newspapers.