(a) Outline three distinguished features of…

Question 1 Report

(a) Outline three distinguished features of public and private companies.

(b) State three rights available to an ordinary shareholder.

Answer

(a) Three distinguishing features of public and private companies

Basis	Public company	Private company
Membership	Minimum of seven members, with no maximum limit.	Minimum of two members, with a maximum (traditionally fifty), excluding employees.
Transfer of shares	Shares are freely transferable and can be quoted on the stock exchange.	The right to transfer shares is restricted by the articles.
Invitation to the public	May invite the public to subscribe for its shares and debentures through a prospectus.	Cannot invite the public to subscribe for its shares or debentures.
Commencement of business	Must obtain a certificate of commencement before starting business.	Can begin business immediately after incorporation.

(Any three.)

(b) Three rights available to an ordinary shareholder

The right to attend the annual general meeting, and to vote on resolutions in proportion to shares held.
The right to receive a dividend when declared out of the company's profits.
The right to share in the surplus assets of the company on winding up, after all creditors and preference shareholders have been paid.
The right to receive copies of the company's audited accounts and reports, and to a share of any bonus or rights issue.

(Any three.)

Answer Details

(a) Three distinguishing features of public and private companies

Basis	Public company	Private company
Membership	Minimum of seven members, with no maximum limit.	Minimum of two members, with a maximum (traditionally fifty), excluding employees.
Transfer of shares	Shares are freely transferable and can be quoted on the stock exchange.	The right to transfer shares is restricted by the articles.
Invitation to the public	May invite the public to subscribe for its shares and debentures through a prospectus.	Cannot invite the public to subscribe for its shares or debentures.
Commencement of business	Must obtain a certificate of commencement before starting business.	Can begin business immediately after incorporation.

(Any three.)

(b) Three rights available to an ordinary shareholder

The right to attend the annual general meeting, and to vote on resolutions in proportion to shares held.
The right to receive a dividend when declared out of the company's profits.
The right to share in the surplus assets of the company on winding up, after all creditors and preference shareholders have been paid.
The right to receive copies of the company's audited accounts and reports, and to a share of any bonus or rights issue.

(Any three.)

(a) Outline three distinguished features of public and private companies. (b) State three rights available to an ordinary shareholder.