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Topic: Limited Companies
Content:
- Meaning of Limited companies
- Types of Limited companies
- Formation (legal requirements) of limited companies.
Sub-Topic 1: Meaning of limited companies
A limited liability company is a business owned by a number of people, operated by a legal person on behalf of its owners, with the usual motive of profit and with the provision that the owners are liable to the company only to the value of the share capital they individually hold.
It is also referred to as a joint stock company and can be defined as an incorporated business organization established for profit making.
Evaluation:
Define a public liability company
SUB-TOPIC 2: TYPES OF PUBLIC LIABILITY COMPANIES
There are two types of limited liability companies, namely: private limited liability companies and public limited liability companies:
- Private Limited Liability
A private limited liability company has the following features or characteristics
- It restricts the right to transfer its shares
- It limits the number of its members from two to fifty (2-50) persons
- It does not subscribe shares to the public
- The name of the company must end with “Limited”.
- The shareholders liability is limited.
Public Limited Liability company
A public limited liability company has the following features or characteristics
- Allows the public to subscribe to its shares
- Must have a minimum of seven persons but no maximum number prescribed.
- Allows the shares to be transferred
- Must end with “PLC”.
- It can sue and be sued in its own name
- It has limited liability – i.e. the liability of share holders is limited to the amount contributed to the company.
- It has perpetual existence – the death or withdrawal of some members will not affect the existence of the company.
- It must follow some special formalities before registration
- It is required by statute to keep certain prescribed books of account
- The owners which are the shareholders are separated from the management.
Evaluation:
Distinguish between a private and a public limited liability company
SUB-TOPIC 3: FORMATION OF A LIMITED LIABILITY COMPANY.
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