Theory question 102
Business UnitsCommerce 2 (answer any five questions)
(a) Give six features of a public company.
(b) Explain four reasons for winding up a public limited company.
Show the model answer
(a) Any six: minimum of seven (now two) members with no maximum; separate legal entity – can sue and be sued; limited liability of shareholders; shares offered to the public and freely transferable/quoted on the stock exchange; perpetual succession; managed by a board of directors elected by shareholders; must publish audited annual accounts; formed by registering a Memorandum and Articles of Association; must obtain a trading certificate before starting business; ends 'Plc' in its name; holds statutory and annual general meetings.
(b) Any four, explained: inability to pay its debts (insolvency) – creditors petition the court; resolution of the shareholders (voluntary winding up); continuous losses; failure to start business within a year of incorporation or suspension of business for a year; completion of the purpose for which it was formed or expiry of its fixed period; membership falling below the legal minimum; fraud or illegal activity – court orders it; failure to hold the statutory meeting or file the statutory report; amalgamation/merger with another company.
Six features, four reasons; explain each reason in (b).