This question requires that candidates explain the preference and advantages of a public limited company has over a one-man business.
The question was attempted by a large proportion of the candidates. A lack of the skill of comparism affected many as they could only list out many of
the points.
Reasons why a public limited company is preferable to a one-man business are as shown in the table below:
S/NO |
Public Limited Company |
One-man Business |
1 |
Can raise large capital through the issue of shares |
Has limited capital base |
2 |
Perpetual succession or continuity |
Lack of continuity |
3 |
Limited liability of shareholders |
Unlimited liability of the owner |
4 |
A separate legal entity. Can sue and be sued as a legal person |
No separate legal entity; is seen as one with the owner |
5 |
Enjoy economies of large scale production |
Not always large enough to enjoy the economies of large scale production |
6 |
Separation of ownership from management |
There is unlikely to be a separation of ownership from management |
7 |
Unlimited expansion potentials |
The possibility of expansion is limited. |
