Introduction to Limited Liability Companies

• Contrary to popular belief among students and common people the word company is not synonymous (the same as) the word business.
• Not all businesses are companies as we have already seen there are other types (forms) of businesses that are not companies for example sole traders, partnerships and franchise businesses.
• The word “company” is often used by people when referring to Limited Liability Companies.
• Limited Liability Companies are a group of companies found in the private sector whose liability is limited.
• This means that the owners of such companies only loose the amounts that they have invested in the business in the event of the business becoming insolvent.
• Hence the use of the word limited in the name of these companies.
• Limited companies are usually required to use the word limited as part of their name for example “Econet Wireless Limited.”
• Ownership of such business is in the form of shares.
• The capital of companies is divided into units called shares.
• Also companies are treated as separate entities under the law.
• This means that the company can enter into contracts and sue and be sued in its own name.

To access more topics go to the O Level Business Notes page.