TOTAL CHILD SCHOOL, PORT HARCOURTWEEK: 3
TOPIC: BUSINESS ORGANIZATION
SUB-TOPIC: LIMITED LIABILITY COMPANY
Meaning of Limited Liability Company
A limited liability company is a form of business organisation owned by shareholders, whose liability is limited to the amount of capital they invested in the business. The company is a separate legal entity from its owners.
Definition
A limited liability company is a business organisation registered under the Companies and Allied Matters Act (CAMA), with ownership divided into shares and managed by directors.
Types of Limited Liability Company
Features / Characteristics of Limited Liability Company
Sources of Capital
Advantages of Limited Liability Company
Disadvantages of Limited Liability Company
Differences Between Private and Public Limited Companies
| Basis | Private Ltd | Public Plc |
|---|---|---|
| Membership | 2–50 | Minimum of 7 |
| Share sale | Not to the public | Sold to the public |
| Transfer of shares | Restricted | Freely transferable |
| Capital | Limited | Large |
Formation of an Limited Liability Company:
Documents involved:
Meaning of shares, stock and debentures
Shares: Shares are units of ownership in a company. When a person buys shares, they become a part-owner of the company and may receive dividends.
Stock: Stock is the total value of shares combined together. It usually refers to fully paid shares grouped into one unit.
Debentures: Debentures are long-term loans taken by a company from the public. Debenture holders are creditors, not owners, and they receive fixed interest.
Types of Shares:
Summary: A limited liability company is an advanced form of business organisation that combines large capital, limited liability, and continuity, making it suitable for large and risky businesses, though it involves complex legal procedures.