Question Tag: Private Company

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  • 8 Marks

BCL – May 2019 – L1 – Q6b – Company Law

Identifies conditions under which a person is disqualified from being appointed as an auditor in a private company.

b) Identify FOUR (4) conditions to disqualify a person from being appointed as auditors in a private company.
(8 marks)

 

The following conditions disqualify a person from being appointed as an auditor in a private company under Section 270 of the Companies Act, 1963 (Act 179):

  • An Officer of the Company: A person who is an officer of the company in question or any of its associated companies is disqualified from being appointed as an auditor.
  • Employment Relationship: A person who is a partner of or in the employment of an officer of the company or of any associated company is disqualified.
  • Undischarged Bankrupt: An undischarged bankrupt, unless he has been granted leave to act as an auditor of the company concerned by the court that adjudged him bankrupt.
  • Person Found of Unsound Mind: Any person found by a competent court to be a person of unsound mind is disqualified.

Additional conditions include:

  • Infants: A person who is an infant is disqualified.
  • Corporate Entities: A body corporate cannot be appointed as an auditor except in the manner provided by law.
  • Fraudulent Practices: Any person who is subject to restraining orders due to fraudulent practices is disqualified from acting as an auditor.

(2 marks for 4 points = 8 marks)

  • 10 Marks

BMIS – April 2022 – L1 – Q1b – The business organisation and its stakeholders

Explain what a public limited liability company is and discuss two features of a private limited liability company.

Nkaagi, your long-time family friend who is an Engineer by profession, recently took over as the Chief Executive Officer of Wakawaka Investment Ltd, a company listed on the Ghana Stock Exchange. He has on several occasions complained about the many legal requirements they have had to contend with and has now approached you for advice on the benefits to be derived from converting a public limited liability company into a private limited liability company.

Required:
i) Explain what a public limited liability company means to Nkaagi. (4 marks)
ii) Explain TWO (2) features of a private limited liability company. (6 marks)

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.

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