Compare and contrast the private limited company with the public limited company.
Question 1 Report
Compare and contrast the private limited company with the public limited company.
Answer Details
Both are joint-stock companies formed by registration (incorporation) under the Companies Act, so they share several features before we look at their differences.
Similarities. Each is an incorporated body with a separate legal personality from its owners; the shareholders enjoy limited liability (they lose only what they invested); each has perpetual succession (it continues despite death of members); each is owned by shareholders but run by a board of directors.
Differences.
| Feature | Private limited company (Ltd) | Public limited company (Plc) |
|---|---|---|
| Membership | Minimum of 2, maximum of 50 (excluding employees) | Minimum of 7, no maximum |
| Transfer of shares | Restricted; shares cannot be freely transferred | Freely transferable through the stock exchange |
| Raising capital | Cannot invite the public to buy shares or debentures | Can invite the public through a prospectus |
| Commencement of business | Can begin once it receives the certificate of incorporation | Needs both the certificate of incorporation and a certificate of trading |
| Name ending | Ends with "Ltd" | Ends with "Plc" |
| Publication of accounts | Enjoys more privacy | Must publish audited accounts |
Examination takeaway: a "compare and contrast" answer must give both the shared features and the point-by-point differences on the same characteristic (membership vs membership, shares vs shares); a table earns marks cleanly.
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