Private and Public Limited Liability Companies Aliesha Bridgelal Levi Clarke Odunmbaku Somorin

What is limited liability? A company whose owners are legally responsible for its debts only to the extent of the capital they invested. Limited liability is a type of legal structure for an organization where a corporate loss will not exceed the amount invested in a partnership or limited liability company. In other words, investors' and owners' private assets are not at risk if the company fails. Simple easy to remember definition- A company that limits owner liability to their shares.

PRIVATE LIMITED LIABILITY COMPANIES

What is a private limited liability company? A private limited liability company (PLLC) is a type of limited liability company A private limited liability company is a company which, by its Memorandum and Articles of Association: restricts the right to transfer its shares; limits the number of its members to 50; prohibits shareholders from publicly trading shares.

How is a private limited liability company formed? The very first thing owners or members must do is to choose a name. Then the articles of organization must be documented and filed with the state. These articles establish the rights, powers, duties, liabilities, and other obligations of each member of the LLC. Other information included on the documents includes the name and addresses of the LLC's members, the name of the LLC's registered agent, and the business' statement of purpose. The articles of organization must be accompanied by a fee paid directly to the state. This type of company belongs to the private sector.

Who is the ultimate authority in a private limited liability company? The general assembly is the supreme authority Private Limited Company is run by its representatives known as board of directors (minimum of two), which are appointed by the members of the company at the Annual General Meeting. Note– A director does not need to be shareholder and a shareholder has no right being a director

How are decisions made in a private limited liability company? The company’s shareholders have the right to attend and vote in the general assembly (a meeting that is held every year.) However the shareholders elect a board of directors. The board of directors are then responsible for management and running of the company based on rules set up when the company is formed.

What are the advantages of a private limited liability company? Owners or members of a Public Limited Liability Company have limited liability. This means that unlike in partnerships, sole traders and other similar corporations, they do not assume the risks for any debts or financial obligations incurred by their companies. Minimum number of shareholders The minimum number of required shareholders is 2 Unlimited life Private companies’ existence does not cease with the death of a director or shareholder

What are the disadvantages of a private limited liability company? Restricted Access to capital markets No accessing the public means, no chances at potentially great capital markets. Limited Personal Control Founders don’t have total control over the company’s operations High Cost Of Administration As a legal obligation, (PLLC) must appoint at least two directors, in many cases, a company secretary, professional accountants. It can increase general and admin expense and ultimately cost way more than it does to be a sole trader

PUBLIC LIMITED LIABILITY COMPANIES

What is a pubic limited liability company? A public limited liability company is the legal term of a limited liability company that has offered shares to the public

How is a public limited liability company formed? First of all, selecting a name. It can be formed by seven members with no maximum limit. A (PLLC) can begin its business after receiving “Certificate for Commencement of Business” It belongs to the private sector since it is not owned by the government.

Who is the ultimate authority in a public limited liability company? The Board of directors

How are decisions made in a public limited liability company? Shareholders are the owners but they appoint a board of directors who control decision making

What are the advantages of a public limited liability company? Limited Liability- Liability of shareholders is limited to the value of shares held by them. No maximum limit, access to huge capital markets. Improve branding and prestige – being in the public domain, trading assets and opening yourself to the stock market all bring a certain level of brand prestige

What are the disadvantages of a public limited liability company? Potential for loss of control- ultimately, shares control company ownership, meaning if you sell off more than 50%............. Different Directions for the business Increased Legal Implications--- by entering the public domain, cooperation must adopt more rigorous legal practices.