Compare a partnership and a public limited company... | WAEC SSCE - Commerce - 2008 (Essay)

Question 1 Report

Compare a partnership and a public limited company as business unit under the following headings;

(a) formation
(b) ownership
(c) raising of capital
(d) liability
(e) transfer of shares

Answer

Comparison of a partnership and a public limited company

Heading	Partnership	Public limited company
(a) Formation	Formed easily by agreement of 2 to 20 persons, often through a partnership deed; few legal formalities.	Formed by at least 7 members with no upper limit; must register with the Corporate Affairs Commission and file the Memorandum and Articles of Association before a certificate of incorporation is issued.
(b) Ownership	Owned by the partners (2 to 20).	Owned by the shareholders (minimum of 7, no maximum), who may be numerous and widely spread.
(c) Raising of capital	Capital is limited, contributed by the partners and by loans; cannot invite the public.	Can raise large capital by selling shares and debentures to the general public through the stock exchange.
(d) Liability	Liability of the partners is generally unlimited; personal assets may be used to settle debts.	Liability of shareholders is limited to the amount unpaid on their shares.
(e) Transfer of shares	A partner cannot transfer his share freely; consent of the other partners is required.	Shares are freely transferable from one person to another without the consent of other members.

Answer Details

Comparison of a partnership and a public limited company

Heading	Partnership	Public limited company
(a) Formation	Formed easily by agreement of 2 to 20 persons, often through a partnership deed; few legal formalities.	Formed by at least 7 members with no upper limit; must register with the Corporate Affairs Commission and file the Memorandum and Articles of Association before a certificate of incorporation is issued.
(b) Ownership	Owned by the partners (2 to 20).	Owned by the shareholders (minimum of 7, no maximum), who may be numerous and widely spread.
(c) Raising of capital	Capital is limited, contributed by the partners and by loans; cannot invite the public.	Can raise large capital by selling shares and debentures to the general public through the stock exchange.
(d) Liability	Liability of the partners is generally unlimited; personal assets may be used to settle debts.	Liability of shareholders is limited to the amount unpaid on their shares.
(e) Transfer of shares	A partner cannot transfer his share freely; consent of the other partners is required.	Shares are freely transferable from one person to another without the consent of other members.

Compare a partnership and a public limited company as business unit under the following headings; (a) formation (b) ownership (c) raising of capital (d) lia...