• 10 Marks

BCL – L1 – Q51 – Alternative forms and constitutions of business organisations

Explain advantages of a company limited by shares under the Companies Act.

Section 9 of the Companies Act, 1963 (Act 179) provides that a company limited by shares is “a company having the liability of its members limited to the amount, if any, unpaid on the shares respectively held by them”.

Required:

State and explain TWO (2) advantages that exist for a company limited by shares.

The advantages include:

  • Property: The Company can acquire/own property and dispose such property as it wishes.
  • Contractual relationship: A company on incorporation, has the capacity to enter into contractual relationship with a natural or legal persons.
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