Economics » Business Organisations » Private Enterprises

Limited Liability Companies

Limited Liability Companies

These are divided into two (2):

1. Private Limited Liability Company:

This is a form of business organisation which is privately owned by a minimum of two (2) and a maximum of fifty (50) members. By its nature of existence, it cannot offer its shares to the public for subscription; e.g. Heinemann Educational Books Nig. Ltd.

Features of a Private Limited Liability Company

  1. It has a minimum of 2 and a maximum of 50 members.
  2. The company does not sell shares to the public to raise capital.
  3. The shareholders enjoy profits earned by the company and also, bear the losses incurred.
  4. Shareholders contribute their funds for the business as shares.
  5. It has larger capital shareholders when compared to partnership and sole proprietorship.

2. Public Limited Liability Companies:

A joint stock or public limited liability company is a form of business organisation in which the liability of the shareholders is limited to the amount of capital they contributed. It is made up of a minimum of seven (7) members without a maximum. Examples include Nigeria Bottling Company Plc., Zenith Bank Plc., etc.

Features of a Public Limited Liability Company

  1. It enjoys widespread ownership since it does not have a maximum number of members.
  2. The shareholders have limited liability.
  3. Shareholders can freely transfer or sell their shares.
  4. The death or retirement of a shareholder does not affect the company.
  5. They can sell shares to the general public to raise capital.

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