Private Limited Liability Company
The owners of a Private Limited Liability Company range from two (2) to fifty (50) as stipulated by the Companies and Allied matters decree of 1990. The sole aim is to make a profit. It does not float its shares on the stock exchange for public subscription. If there is a need for additional capital, the existing members contribute the amount required or source it from any available means.
All business enterprises whose name ends with the acronym “Ltd” are private companies, examples are; ABC Transport (WA) Ltd, George, John & Co (Nig) Ltd, etc.
Advantages of Private Limited Liability Company:
1. A Private Limited Liability Company can easily raise capital through the issue of debentures, from the banks in form of loans and sales to their members.
2. The shareholder’s personal properties/assets are protected from business bankruptcy. The members lose only the full paid-up value of their shares in the business if the business fails.
3. The business enjoys the economics of large-scale production.
4. The business enjoys greater continuity unless it goes bankrupt.
5. A private limited company is a separate legal entity, the owners have a separate legal existence from the business by law, and the business can both sue or be sued in its name.
6. The board of directors is elected by members to manage and control the business.
7. The account of the business is not made public.
Disadvantages of Private Limited Liability Company:
1. The capital contributed is not as much as that of public limited liability companies.
2. The shares of these companies cannot be advertised publicly.
3. There is a delay in decision-making. A major decision will ensure the attention of all the board of directors before being taken.
4. In private limited liability companies, shares are not easily transferable. A shareholder cannot easily transfer its shares without the consent of the company’s management.