LIMITED LIABILITY COMPANY
Junior Secondary School
Business Studies JSS 1(Basic 7)
Second Term Lesson Notes
Subject :
Business Studies
Term :
SECOND TERM
Week:
Week 7
Class :
JSS 1
Topic :
LIMITED LIABILITY COMPANY
Previous lesson :
The pupils have previous knowledge of
that was taught as a topic during the last lesson.
Behavioural objectives :
At the end of the lesson, the pupils should be able to
- Say the meaning of limited liability companies
- Explain how limited liability companies are formed
- List the objectives of forming liability companies
- Mention the merits and demerits of liability companies
Instructional Materials :
- Wall charts
- Pictures
- Related Online Video
- Flash Cards
Methods of Teaching :
- Class Discussion
- Group Discussion
- Asking Questions
- Explanation
- Role Modelling
- Role Delegation
Reference Materials :
- Scheme of Work
- Online Information
- Textbooks
- Workbooks
- 9 Year Basic Education Curriculum
- Workbooks
Content
LIMITED LIABILITY COMPANY
CONTENT
- Meaning of Limited Liability Company
- Public Limited Liability Company
- Advantages and Disadvantages of Public Limited Liability Company
- Meaning of Private Limited Liability Company
- Advantages and Disadvantages of Private Limited Liability Company
- Comparison between Public and Private Companies
Meaning of Limited Liability Company
A Limited Liability Company is a company in which the responsibility or liability of members for debts of the company is limited to the capital they have contributed or agreed to contribute. The private properties of members are excluded, and all that members lose if the company fails is the money they have contributed. It is formed and registered under the law known as the Company Act. When a company is formed and registered with the Registrar of Companies, it is said to be incorporated.
There are two types of Limited Liability Company namely, Private and Public Companies.
Public Limited Liability Company
A Public Limited Liability Company is a business unit that carries on business to make profit for its owners. Examples are Nigerian bottling company Ltd., Total Nigeria Limited, First Bank of Plc. It is owned by Shareholders and managed and control by Board of management.
Advantages of Public Limited Liability Company
- It can raise money from the public through issuing of shares and debentures. This enhances the company expansion.
- It is a legal entity because it can sue and can be sued.
- The company’s properties are different from that of its owners.
- It enjoys continuity because it has perpetual life. The company can only be wounded voluntarily or on the order of a law court.
- Share holders cannot lose more than the value of their shares. This is because the company enjoys limited liability.
Disadvantages of Public Limited Liability Company
- Shareholders have little say in the running of the company
- It does not enjoy privacy. It annual account must be published in the Newspaper for the public to see.
- It suffers from double taxation. The net profit of the company is taxed and the dividends of the shareholders are also taxed.
Private Limited Liability Company
Meaning of Private Limited Liability Company
A private limited liability company is a profitable making business with few shareholders and no open market for its shares. Examples of private limited liability company are Newswatch Communication Ltd., Ekene Dili Chukwu Transport Service Ltd., JIMBAZ Construction Company Ltd. etc.
Advantages of Private Limited Liability Company
(i) They enjoy privacy.
(ii) Their annual report and accounts are not required by law to be published, except for taxation.
(iii) Management and control is less complex than in public limited company. Its management structure is simple.
Disadvantages of Private Limited Liability Company
(i) Shares cannot be issued to the public.
(ii) Capacity to raise external finance to expand business is limited.
(iii) Transfer of shares to others is made difficult.
Comparison between the Private and Public Limited Liability Companies
| S/N | PUBLIC LIMITED COMPANY | PRIVATE LIMITED COMPANY | |
| 1. | Minimum number of members is seven and has no maximum | Minimum number of members is two while the maximum is fifty. | |
| 2. | Shares are offered to the public. | Shares may not be offered to the public. | |
| 3. | Shares are easily transferable. | Shares are not transferable. | |
| 4. | Account is publish to the public | Account is published for the information of Registrar of Companies. | |
Presentation
The topic is presented step by step
Step 1:
The class teacher revises the previous topics
Step 2.
He introduces the new topic
Step 3:
The class teacher allows the pupils to give their own examples and he corrects them when the needs arise
EVALUATION
- What is a limited liability company?
- State 3 advantages of public limited liability company.
- State 3 advantages of a private limited liability company.
- Enumerate 3 disadvantages of a private limited liability company.
- Mention two types of co-operative societies that you know
Conclusion
The class teacher wraps up or conclude the lesson by giving out short note to summarize the topic that he or she has just taught.
The class teacher also goes round to make sure that the notes are well copied or well written by the pupils.
He or she does the necessary corrections when and where the needs arise.