(a) What is a public limited liability company?
(b) State and explain any five features distinguishing a public limited company from a partnership
Explanation
(a) Public limited company is an artificial person created by law to carry on business with the aim of profit maximization. A public limited company is a separate legal entity with the right to sue and be sued.
| public liability company | partnership | |
| membership | No upper limit to the number of shareholders | limited to 20 people |
| perpetual existence | There is the continuous existence | The death of a partner can bring the partnership to an end |
| ownership and control | Shareholders do not take part in the management of the company | partners can take part in running the affairs of the partnership |
| Legal entity | company is a separate legal entity | it is not a separate legal entity |
| Limited liability | It has limited liability | It has unlimited liability |
| Raising of capital | The company can issue shares to the public | partners can only raise capital through partners contribution |
| Formation | company secures incorporation by filling the article of association | the partnership is formed by signing the deed of partnership |