PRIVATE LIMITED LIABILITY COMPANY

          A private limited company differs from the public, in that by its Articles, it must restrict the right of its members to transfer their shares. Secondly limit the number of its members to fifty and prohibit any invitation to the public to subscribe any shares or debentures of the company. Two persons are sufficient to subscribe the memorandum of association. A private company is excused from filing annually a balance sheet with registrar but it must annually certify that the public have not been invited to subscribe for shares or in connection with what may be termed family businesses. By registering such business as a private company, the owner or owners can enjoy the advantages either of a sole trader or a partnership without risk of unlimited liability. Employees can be admitted to share in the business; the capital can be divided amongst the members of the families of those interested in the business without disturbing the financial arrangements of the business or saddling the beneficiaries with unlimited liability. The capital of a private limited liability company may most times be held almost entirely by one person, the other signatories to the

Memorandum being his nominees, formerly, this type of company, colloquially known as a one man company was regarded with suspicion but very far less today.

                                    ALLOCATION OF PROFITS-

           The profits of a business do not mean quite the same thing to the businessman as it means to the economist. There is also a distinction in the meaning of word, profits as between a company’s profit and the profits of a sole trader or a partnership. In company’s accounts the balance of the profit and loss account shows the profit  after making provision for all management  expenses, whereas  the profit and loss account of a sole trader  or partnership discloses a figure of profit  before  provision  has been made for managing partners salaries or to put it another way  for personal efforts of the partners. Actually the apparent net profits do not unless in the case of a company, properly reflect the earning capacity of the business. Very serious to know that some partnership accounts include  in the profit  and loss account the salaries of the partners  as managers but the inland revenue services and authorities as varied in different countries, do not allow these salaries to be set off against profits. They add them back to the profits when assessing them firm for tax.

                               ADVANTAGES OF A LIMITED LIABILITY COMPANY-

            Registration facilitates the interest in the company’s raising of fresh capital increases financial resources and thus enhances credit makes extensions and amalgamations easy to effect and permits employees  to acquire  an interest in the company’s business so conducing to their loyal and devoted service. The death or bankruptcy of the members of a company does not affect a company’s existence or continuation. A partnership is dissolved on the happening of either event, while the death of a sole trader involves the sale of the business by his executors unless he himself made arrangements for its continence prior to his death. The purchase  and transfer  of shares  in companies  is  easily effected and persons  who are but  slightly  acquainted with  or wholly ignorant of , business are able to share in the profits  of commercial enterprise without  greater risk than  the nominal value of the shares they purchase. The greatest advantage of all conferred by registration is the limited liability of the members. At once, it was commonly thought that registration would adversely affect the credit of an undertaking but this idea is dead. In earlier days, no doubt for sure businesses were converted into companies in order that their owners might there by defeat the claims of creditors. But the legislatures keep a watchful eye on Joint stock enterprise and by timely legislation as the need is disclosed, close the loopholes for the possible fraud.

                                                      STATUTORY COMPANIES-

                 A statutory or for parliamentary company is formed by a private or special act of parliament and the ACT govern all its operations. The special Act embodies by the reference the provision of some General Act, applicable to the type of undertaking. For example an Act of parliament constituting a construction company  would have incorporated  by reference the company  and is a creditor of the company  for the sum stated  provisions of constructions  clauses Act of 1845 and the lands  clauses consolidation  Act of the same  year 1845. These general acts supplied a code of regulations and stipulations applicable to construction companies. Statutory companies were originally formed to promote canal construction and extended companies incorporated for construction of railways, docks, water works, gas works, tramways, electricity works and similar public utility undertakings. They constituted them endowed with compulsory powers so that they could take over land and commit what without these powers would be nuisances in law. Most statutory companies have now been nationalized and are or are part of public corporations.