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WEEK 3

TOPIC: FIRMS AND INDUSTRY: Private and Public Companies                             

Content

1. Definition and Characteristics
2. Distinction between Private and Public Companies
3. Quoted and Unquoted companies
4. Shares, Debentures and Bonds

Sub-Topic 1:  Definitions and Characteristics of Private and Public Companies

Definition of LIMITED LIABILITY COMPANIES

There are two types of Limited Liability Companies – Private Limited Liability Company or ‘the closed company’ and the Public limited liability company or the Public joint stock company.

The Private Limited Liability Company (Unquoted Company)

A Private Limited liability company is defined as one which by its articles restricts the right to transfer its shares and limit the number of its shareholders from two to fifty. The name of the private company must end with “Limited” e.g. AGRO Nigeria Limited etc.

The Public Limited Liability Company (Quoted Company)

Public Liability Company is defined as one which by its articles allows the public to subscribe to its shares, must have at least seven persons but no maximum number is prescribed. The shares can be transferred and the name of the public company must end with “PLC”, e.g. GTBank Plc., Vitafoam Nigeria Plc. etc. This is the type that is popularly referred to as Joint Stock Company.

In the activities of a joint stock company, two documents are dominant. These are;

1. The Articles of Association
2. The Memorandum of Association

• The Articles of Association takes care of the internal relationships between the company and the members
• The Memorandum of Association is meant for regulating the external relationship of the company.

Features or Characteristics of Private Limited Liability companies

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