(a) Give six features of a public company
(b) Explain four reasons for winding up a public limited company
Explanation
(a) The features of a public company are:
(i) It has a legal status: It can sue and be sued.
(ii) Liability of members is limited.
(iii) It can issue debentures to be secured by its assets.
(iv) Shares are easily transferable through the stock market.
(v) It files and publishes its annual reports and accounts.
(vii) The minimum membership is two while there is no limit to its membership.
(viii). It must receive its trading certificate to commerce business.
(b) Some of the reasons for winding up a public limited company are:
(i) Shareholders can pass a resolution at a meeting for voluntary liquidation. It can be as a result of the company’s inability to pay its debts or is no longer a good investment or if the purpose for which the company was established has been accomplished.
(ii) A company can be liquidated by the court if it can no more honour its obligations, settlement of its debt or if it is formed for illegal purposes.
(iii) The Corporate Affairs Commission can strike out a company’s name out of its register.
(iv) If the company does not commence business within a year of its incorporation.
(v) Liquidation can also occur when the number of shareholders falls below the statutory minimum requirement.
(vi) By voluntary winding up, subject to the law court supervision if some shareholders ask the court for it.