Theory question 106
Business UnitsCommerce 2 (essay, answer five questions only)
(a) State five characteristics of a limited liability company
(b) Explain five sources of funds to a public limited company.
Show the model answer
Model answer
(a) Any five: limited liability; separate legal entity; continuity; registered with memorandum and articles; capital divided into shares; managed by a board of directors; owned by shareholders; must publish accounts/hold AGMs.
(b) Any five, explained: ordinary shares; preference shares; debentures; retained profits; bank loans and overdrafts; trade credit; leasing/hire purchase; government grants.
Explanation
Explain each source in (b) briefly.