Compare a public limited company with partnership... | WAEC SSCE - Commerce - 2014 (Objective)

Question 1 Report

Compare a public limited company with partnership under the following headings

(a) formation: (b) Ownership and Control: (c) Source of Capital: (d) Liability: (e) Dissolution:.

Answer

Comparison of a public limited company with a partnership

Heading	Public limited company	Partnership
(a) Formation	Formed by at least seven members (no maximum); registered with the Corporate Affairs Commission and must file a Memorandum and Articles of Association. It cannot begin business until it obtains a Certificate of Incorporation and a Certificate of Trading.	Formed by a minimum of two and a maximum of twenty persons under a partnership deed (or the Partnership Act). Registration is simple and formation is relatively easy and cheap.
(b) Ownership and control	Owned by shareholders but controlled by an elected Board of Directors; there is separation of ownership from control.	Owned and controlled directly by the partners themselves, who take part in management.
(c) Source of capital	Raises large capital by selling shares and debentures to the public and can borrow from banks.	Capital is contributed by the partners and is limited to their means, plus loans; it is comparatively small.
(d) Liability	Shareholders enjoy limited liability; they lose only the amount unpaid on their shares.	Ordinary partners have unlimited liability; their personal property may be used to settle the firm's debts.
(e) Dissolution	Has perpetual succession; it continues to exist despite the death, insanity or withdrawal of members, and can only be wound up by legal process.	Easily dissolved; the death, insanity, bankruptcy or withdrawal of a partner may bring the firm to an end.

Answer Details

Comparison of a public limited company with a partnership

Heading	Public limited company	Partnership
(a) Formation	Formed by at least seven members (no maximum); registered with the Corporate Affairs Commission and must file a Memorandum and Articles of Association. It cannot begin business until it obtains a Certificate of Incorporation and a Certificate of Trading.	Formed by a minimum of two and a maximum of twenty persons under a partnership deed (or the Partnership Act). Registration is simple and formation is relatively easy and cheap.
(b) Ownership and control	Owned by shareholders but controlled by an elected Board of Directors; there is separation of ownership from control.	Owned and controlled directly by the partners themselves, who take part in management.
(c) Source of capital	Raises large capital by selling shares and debentures to the public and can borrow from banks.	Capital is contributed by the partners and is limited to their means, plus loans; it is comparatively small.
(d) Liability	Shareholders enjoy limited liability; they lose only the amount unpaid on their shares.	Ordinary partners have unlimited liability; their personal property may be used to settle the firm's debts.
(e) Dissolution	Has perpetual succession; it continues to exist despite the death, insanity or withdrawal of members, and can only be wound up by legal process.	Easily dissolved; the death, insanity, bankruptcy or withdrawal of a partner may bring the firm to an end.

Compare a public limited company with partnership under the following headings (a) formation: (b) Ownership and Control: (c) Source of Capital: (d) Liabilit...