LIMITED LIABILITY COMPANY

This is a business organisation which has been in corporation. It is an association of individuals who agreed to jointly put their resources together for the purpose of having a business distinct from their owners.

It is a legal entity created through state approval and separate its owners. There are two types of limited liability companies:

  • Public Limited Liability Company
  • Private Limited Liability Company

PUBLIC LIMITED LIABILITY COMPANY

Public limited liability company that has a minimum of seven members and no maximum. It is owned by the members of the public e.g. UAC PLC, FIRST BAND PLC, NESTLE PLC, ACADEMY PRESS PLC etc.

They share profit called dividend yearly and the members are known as shareholders

FEATURES

  • It shares can be traded and transferred the stock exchange market
  • It is required to publish its account at the end of the trading period
  • Workers can become shareholders
  • Its name ends with Plc – Public liability Company

SOURCES OF FINANCE

  • Contribution from members
  • Loan and overdraft from bank
  • Loan from private individual
  • Create facilities from the supplier

ADVANTAGES

  • It can sell share to the members of the public
  • It can also borrow from the members of the public
  • It engages in different line of business
  • The share can be listed and quoted in the stock exchange market.

DISADVANTAGES

  • It is expensive to set up
  • It requires large capital
  • Slow decision making
  • The account must be published

PRIVATE LIMITED LIABILITY COMPANY

This is a company owned by Private Individuals. It can also be formed by a minimum number of the two and maximum of fifty members e.g. Oyelade Nigeria.

FEATURES

  • It is owned by Private individuals
  • It enjoys privacy
  • The shares cannot be traded at the stock exchange market
  • It must end with limited (LTD) e.g Marvic and associate Nig. Ltd

SOURCES OF FINANCE

  • Contribution from members
  • Loan from private individuals
  • Credit facilities from suppliers
  • Loan from bank and overdraft

ADVANTAGES

  • It enjoys privacy
  • Its management structure is simple
  • The management and control are very easy
  • The annual report might not be published except for the use of the company.

DISADVANTAGES

  • Shares cannot be issued to the members of the public
  • Borrowing from the public is not allowed
  • Private limited liability company cannot be listed in stock exchange markets.

Assignment

  • What is a company?
  • Write short notes on:
  • Consumer cooperative society
  • Multi-purpose cooperative society
  • Who is a sole proprietorship?

b. Give five public cooperative

See also:

PUBLIC CORPORATION

SOLE TRADE

IMPORTANCE OF ENTREPRENEURSHIP

ENTREPRENEURSHIP

FACTORS OF PRODUCTION

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