This could be defined as a company where the liability of members who formed the business is limited to the amount contributed as capital to the business. It means that the owners of these companies stand to lose only the amount contributed and not their private properties.
Features or Characteristics of a Limited Liability Company:
1. Ownership: The business is owned by shareholders who may be between two and fifty persons in number.
2. Objective: The major aim of a private limited company is to make a profit.
3. Source of Capital: The capital required to set up and run the business is provided by the shareholders in form of shares.
4. Liability: The shareholders have limited liability.
5. Legal Entity: The business is a separate legal entity and is different from the owner of the business.
6. Continuity: There is continuity of business operations as the withdrawal or death of a shareholder may not affect the existence of the company.
7. Shares are not Easily Transferable: Shares cannot be resold to other persons except with the consent of other shareholders.
8. Management: The private limited company is managed by a board of directors appointed by shareholders.
There are two types of limited liability companies namely;
1. Private Limited Liability Company
2. PublicLimited Liability Company
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