ECONS 101

PUBLIC LIMITED LIABILITY COMPANY/ JOINT STOCK COMPANY

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A Public Limited Liability Company is defined as one which by its articles allows the public to subscribe for its shares, must have a minimum of 7 persons but no maximum number. It allows the shares to be transferred and the name of the public limited company must end with the abbreviation "plc".

Public meaning that any member of the public is free to purchase shares in the business when shares are advertised for sale. Public limited company is usually owned by private individuals and organizations.

Public Limited Liability Companies or Joint Stock Companies are organisations which have separate legal entity. It is regarded in law as having an identity of its own. The Shareholders are not personally responsible for anything that is done in the name of the organisation. The shareholders also enjoy the advantage of a large number of people who through the purchase of shares become owners of the company. For Example- First Bank Plc, Texaco Nig. Plc etc.

FEATURES/CHARACTERISTICS OF PUBLIC LIMITED LIABILITY COMPANY:

1. Ownership- The number of shareholders range from 7 to infinity.

2. Perpetual Existence- The death or withdrawal of some shareholders will not attract the existence of the company. It enjoys continuous existence.

3. It has Limited Liability- The Liability of Shareholders is limited to the amount contributed to the company. The private properties of the shareholders will not be touched in the event of liquidation.

4. Specific Line of Business- A Public Limited Liability Company is authorised by law to carry on business specified in the object clause.

5. Preparation of Annual Accounts- It is required by statue to keep certain prescribed books of account. The Accounts must be audited and published annually.

ADVANTAGES OF JOINT STOCK COMPANY:

1. Legal Entity- Public Limited Liability Companies have legal existence. They have a distinct personality from the owners, hence they can sue and be sued in their own name.

2. Employees can become Co Owners- Employees could become co-owners of the business by purchasing shares in the company.

3. Recruitment of Experts- Joint stock companies attract men of ability and skill to work for it.

4. Economies of Large Scale Production- Public Limited Liability Companies have sufficient capital for expansion, which can lead to mass production of goods.

5. Loan Facilities- Many Banks prefer to grant Loans to Public Limited Companies than other forms of business units because there is no likelihood of default in payment.

6. Democracy in Management- In choosing the Board of Directors, Shareholders have the right to vote or be voted for at the annual general meeting.

DISADVANTAGES OF PUBLIC LIMITED LIABILITY COMPANY:

1. Lack of Privacy- Public Limited Liability Companies lack privacy because they are mandated by law to publish their annual audited accounts to the public. This makes it impossible for them to maintain secrecy/privacy.

2. Conflict of Interests- There is the possibility of conflict of interest among the shareholders, directors and staff, which may affect the efficiency of operations of the business.

3. Payment of Large Corporate Tax- They are saddled with heavy tax burdens, arising from profit declared.

4. Separation of Owners from Control- The Owners of the Business (Shareholders) have little or no say in the affairs of the business, while the people at the helm of affairs who are not the owners may not put in their best.

5. Large Capital Requirement- The Capital required to set up and run a Joint stock Company is usually very Large.

SOURCES OF FINANCE/CAPITAL AVAILABLE TO JOINT STOCK COMPANY:

1. Sales of Shares- A Joint Stock Company can also raise Capital by issuing Shares for Public Subscription.

2. Bill of Exchange- This is a document duly signed by the debtor's bank to the creditor and the creditor cashes the money with some discounts.

3. Retained (Plough Back) Profits- The profits made by the company can be set aside for re-investment.

4.  Sales of Debentures- These are long term loans obtained from the general public at a fixed interest.

5. Sales of Shares- A Joint Stock Company can also raise Capital by issuing Shares for public subscription.

NOTE: PARTS OF THIS POST WERE CULLED FROM TONAD ESSENTIAL ECONOMICS FOR SENIOR SECONDARY SCHOOLS BY C.E ANDE.  WE AT EDU-MADE-EASY RESPECT THIS CRAFT TOO MUCH TO DENY ITS ORIGIN. THANK YOU

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