(a) State five features common to both public and private limited companies. (b) State five provisions of a memorandum of association.

Answer Details

(a) Five features common to both public and private limited companies

1. Separate legal entity: Each is an artificial person in law, distinct from its owners, and can sue and be sued in its own name.
2. Limited liability: The liability of members is limited to the amount unpaid on the shares they hold.
3. Perpetual succession: The company continues to exist despite the death, insanity or withdrawal of any member.
4. Ownership by shareholders and management by directors: Both are owned by shareholders who contribute the capital but managed by a board of directors on their behalf.
5. Registration and legal documents: Both must be registered with the Corporate Affairs Commission and must file a Memorandum and Articles of Association before they can operate.

(b) Five provisions of a Memorandum of Association

1. Name clause: States the name of the company, ending with the word "Limited" or "Plc."
2. Registered office clause: States the location of the registered office or head office of the company.
3. Objects clause: States the aims, objectives and nature of business the company is set up to carry on.
4. Capital clause: States the amount of authorized (registered) capital and how it is divided into shares of fixed value.
5. Liability clause: States that the liability of the members is limited (to the value of their shares).

(A sixth provision, the Association or Declaration clause, states the willingness of the subscribers to form the company and take up shares.)