HomeJSS 1Business Studies JSS 1Understanding Limited Liability Companies: Definition, Types & Benefits

Understanding Limited Liability Companies: Definition, Types & Benefits

 

Lesson Plan: Limited Liability Company

Subject: Business Studies

Class: JSS 1

Term: Second Term

Week: Seven

Age: 10 – 12 years

Topic: Limited Liability Company

Sub-topic: Types, Features, Sources of Finance, Advantages, and Disadvantages

Duration: 40 minutes

Behavioural Objectives

By the end of the lesson, students should be able to:

  1. Define a limited liability company.
  2. Identify the types of limited liability companies.
  3. List and explain the features of public and private limited liability companies.
  4. Describe the sources of finance for limited liability companies.
  5. State the advantages and disadvantages of limited liability companies.

Keywords

  • Limited Liability Company – A business owned by individuals but legally separate from them.
  • Public Limited Company (PLC) – A company whose shares are available to the public.
  • Private Limited Company (Ltd) – A company owned by private individuals, with restricted share transfer.
  • Shareholder – A person who owns shares in a company.
  • Dividend – A share of the company’s profit given to shareholders.

Set Induction (Introduction)

The teacher asks students:

  • Have you ever heard of companies like Nestlé or UAC?
  • Do you know who owns these companies?
  • Can an individual own a company alone?

These questions will help introduce the topic of Limited Liability Companies.

Entry Behaviour

Students are familiar with different types of businesses such as sole proprietorship and partnership.

Learning Resources and Materials

  • Textbooks
  • Charts showing different company types
  • Newspaper clippings of company advertisements
  • Case studies of companies like Dangote Group and UAC

Building Background/Connection to Prior Knowledge

The teacher reminds students about sole proprietorship and partnership, explaining that some businesses grow and require more owners, leading to the formation of limited liability companies.

Embedded Core Skills

  • Critical thinking
  • Communication
  • Problem-solving
  • Financial literacy

Learning Materials

  • Lagos State Scheme of Work
  • Business Studies Textbook for JSS 1
  • Teacher’s Lesson Notes

Reference Books

  • Lagos State Business Studies Curriculum
  • Essential Business Studies for Junior Secondary Schools
  • Business Studies Made Easy

Instructional Materials

  • Business organization charts
  • Videos explaining limited liability companies
  • Sample company registration documents

Content Breakdown

Definition of Limited Liability Company

A limited liability company (LLC) is a type of business organization where the owners’ financial responsibility is limited to the amount they invested in the business. It is legally separate from its owners.

Types of Limited Liability Companies

  1. Public Limited Company (PLC)

    • Has at least seven members, with no maximum limit.
    • Shares are sold to the public through the stock exchange.
    • Examples: UAC PLC, Nestlé PLC, First Bank PLC.

  2. Private Limited Company (Ltd)

    • Has between 2 and 50 members.
    • Shares are not sold to the public.
    • Examples: Oyelade Nigeria Ltd, Marvic & Associates Nig. Ltd.

Features of a Limited Liability Company

  • Separate legal identity from owners.
  • Owners (shareholders) have limited financial responsibility.
  • Must be registered with the government.
  • Public companies must publish their financial reports.
  • Owners share profits in the form of dividends.

Sources of Finance for Limited Liability Companies

  • Contributions from members (shareholders).
  • Loans and overdrafts from banks.
  • Borrowing from private individuals.
  • Credit facilities from suppliers.

Advantages of Limited Liability Companies

  • Owners’ personal assets are protected.
  • Public companies can raise large amounts of money by selling shares.
  • It can exist beyond the lifespan of its owners.
  • It can operate in different industries.

Disadvantages of Limited Liability Companies

  • It is expensive to register and run.
  • Public companies must publish financial records.
  • Decision-making is slow due to many owners.
  • Shareholders may lose money if the company performs poorly.

10 Examples of Limited Liability Companies in Nigeria

  1. UAC PLC
  2. Nestlé PLC
  3. Dangote Cement PLC
  4. MTN Nigeria PLC
  5. Guinness Nigeria PLC
  6. First Bank PLC
  7. Zenith Bank PLC
  8. GTCO PLC
  9. Seplat Energy PLC
  10. Nigerian Breweries PLC

Evaluation (Fill in the blanks)

Choose the correct answer (a, b, c, or d).

  1. A limited liability company is a business that is __ from its owners.
    a) The same
    b) Different
    c) Owned only by one person
    d) Illegal

  2. A company whose shares can be bought by the public is called a __.
    a) Private Limited Company
    b) Public Limited Company
    c) Sole Proprietorship
    d) Government Corporation

  3. One advantage of a limited liability company is __.
    a) Fast decision-making
    b) Unlimited liability
    c) Owners are protected financially
    d) It is easy to start

  4. The number of people required to start a public limited company is __.
    a) Two
    b) Seven
    c) Fifty
    d) One

  5. An example of a private limited company is __.
    a) UAC PLC
    b) Nestlé PLC
    c) Marvic & Associates Nig. Ltd
    d) First Bank PLC

Class Activity Discussion (FAQs)

  1. What is a limited liability company?
    A business that is separate from its owners, with limited financial responsibility.

  2. How is a public limited company different from a private limited company?
    Public companies sell shares to the public, while private companies do not.

  3. Who are shareholders?
    People who own shares in a company.

  4. What is a dividend?
    A portion of the company’s profit paid to shareholders.

  5. Can a limited liability company exist forever?
    Yes, unless it is dissolved.

  6. What is the minimum number of people required to start a public company?
    Seven.

  7. What does ‘PLC’ stand for?
    Public Limited Company.

  8. What is the main disadvantage of a limited liability company?
    It is expensive to set up.

  9. Why do private companies not sell shares to the public?
    To maintain control and privacy.

  10. What happens when a limited liability company goes bankrupt?
    Shareholders only lose the money they invested.

Presentation Structure

  1. Revision of Previous Topic – The teacher reviews Public Corporations.
  2. Introduction of the New Topic – Explanation of Limited Liability Companies.
  3. Student Contributions – Students provide examples, and the teacher corrects them.

Teacher’s Activities

  • Explain the concept of Limited Liability Companies.
  • Display examples of well-known companies.
  • Guide students in group discussions.

Learners’ Activities

  • Listen and take notes.
  • Identify companies they know.
  • Answer evaluation questions.

Assessment (Evaluation Questions)

  1. Define a Limited Liability Company.
  2. List two types of Limited Liability Companies.
  3. Mention three examples of Public Limited Companies in Nigeria.
  4. What is a dividend?
  5. State two advantages of a Limited Liability Company.

Conclusion

The teacher marks students’ work, provides corrections, and summarizes the key points.

Meaning and Features of Public Corporations and Co-operative Societies

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