(a) Highlight any four differences between public... | WAEC SSCE - Economics - 2014 (Essay)

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(a) Highlight any four differences between public limited liability company and a private limited liability company. (8 marks)

(b) Explain any four advantages a limited liability company. (2 marks)

Answer

(a) Four differences between a public and a private limited liability company.

Feature	Public limited company	Private limited company
Membership	Minimum of 7 members, no maximum	Minimum of 2 members, maximum of 50
Sale of shares	Shares sold freely to the public and quoted on the stock exchange	Shares not offered to the public; transfer is restricted
Commencement of business	Needs a certificate of incorporation and a certificate of trading before starting	Can begin business immediately after incorporation
Accounts	Must publish its accounts for public inspection	Not required to publish accounts to the public
Capital	Can raise very large capital from the public	Raises smaller capital from a limited circle of members

(b) Four advantages of a limited liability company.

Limited liability. The liability of members is limited to the amount they invested; personal property is protected if the company fails.
Large capital. A company can raise substantial funds through the sale of shares and debentures.
Continuity (perpetual succession). The company has a separate legal existence and continues even when owners die or leave.
Separate legal entity. It can sue, be sued, own property, and enter contracts in its own name.
Transferability of shares. Shares (especially in a public company) can be transferred, giving investors flexibility.

Examination takeaway. When a comparison is asked, always state each difference on both sides using the same feature, as laid out in the table; a one-sided statement earns half the marks.

Read lesson note on Business Organizations (JAMB)

Read lesson note on Business Organizations (WAEC)

Answer Details

(a) Four differences between a public and a private limited liability company.

Feature	Public limited company	Private limited company
Membership	Minimum of 7 members, no maximum	Minimum of 2 members, maximum of 50
Sale of shares	Shares sold freely to the public and quoted on the stock exchange	Shares not offered to the public; transfer is restricted
Commencement of business	Needs a certificate of incorporation and a certificate of trading before starting	Can begin business immediately after incorporation
Accounts	Must publish its accounts for public inspection	Not required to publish accounts to the public
Capital	Can raise very large capital from the public	Raises smaller capital from a limited circle of members

(b) Four advantages of a limited liability company.

Limited liability. The liability of members is limited to the amount they invested; personal property is protected if the company fails.
Large capital. A company can raise substantial funds through the sale of shares and debentures.
Continuity (perpetual succession). The company has a separate legal existence and continues even when owners die or leave.
Separate legal entity. It can sue, be sued, own property, and enter contracts in its own name.
Transferability of shares. Shares (especially in a public company) can be transferred, giving investors flexibility.

Examination takeaway. When a comparison is asked, always state each difference on both sides using the same feature, as laid out in the table; a one-sided statement earns half the marks.

Read lesson note on Business Organizations (JAMB)

Read lesson note on Business Organizations (WAEC)

Business Organizations

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(a) Highlight any four differences between public limited liability company and a private limited liability company. (8 marks) (b) Explain any four advantag...

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(a) Highlight any four differences between public limited liability company and a private limited liability company. (8 marks) (b) Explain any four advantag...

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