Toyin Omoniyi We have different types of companies in Nigeria such as:
· Limited Liability Company
· Company Limited by Guarantee
· Unlimited Liability Company...
LIMITED LIABILITY COMPANY
A limited liability company can either be a private company or a public company. It must be clearly stated in the company’s memorandum of association that the company is a private company or a public company.
Some major differences between a private company and a public company are:
· The total membership of a private company must not exceed 50 people (not including employees of the company) but a public company has unlimited membership.
· Transfer of shares in a private company are not allowed but they are allowed in a public company.
· The minimum share capital of a private company is N10,000 but it is N500,000 for a public company.
· Upon registration, a private company can start business immediately but a public company has to wait until it has been issued a certificate by the Registrar of Corporate Affairs Commission.
· Private companies are permitted to allot shares but public companies cannot.
· For a private company, “Ltd” must be included in the name of the company but in a public company, it is “Plc”.
Public companies are the largest types of companies and they are usually for business purposes. The shares of a public company represent the involvement and commitment of the shareholders and create very valuable security.
A shareholder who has paid his shares in full cannot be held liable for any part of the liability of the company. But where a shareholder has not fully paid for his shares, he can be called upon at any time to pay up.
COMPANY LIMITED BY GUARANTEE
This type of company does not have share capital and its business is not for profit making. Any income the company makes is put back into the company and there is no sharing of profit because it is not established to make profit. It is usually for promoting art, science, religion, etc.
A company limited by guarantee can only be registered upon the authority of the Attorney-General of the Federation.
The members of a company limited by guarantee will undertake to contribute to the assets of the company if the company folds up. However, the undertaking of each member should not be less than N10,000.
UNLIMITED LIABILITY COMPANY
This type of company does not have a limit on the liability of its members. In a way, it is similar to a partnership because all the members are fully liable for the debts of the company. The liability of the members is unlimited.
Unlimited liability companies are not common because of the unlimited liability and they are used mostly by professionals such as oil prospecting companies, companies working on a patent, etc.
It is essential for the members of an unlimited liability company to be able to estimate the kind of liability or loss it is likely to incur in the future.
So when forming a company, it is necessary to determine the motive behind it so that it will help in deciding on the type of company to register.
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