Activity 3.2
a) How does the existence of limited liability benefit an individual shareholder?
b) Does limited liability make it easier or more difficult for companies to attract new shareholders?
Explain your answer.
c) Explain why a sole trader might not want to convert the business into a partnership.
d) It is possible to convert a public limited company back into a private limited company. This is
done by individuals buying up a majority of the shares. Richard Branson did this several years
ago with the Virgin Group. Why might Mike and Gita have wanted to do this with the Express
Taxi and Bus plc?
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Answer:
a) limited liability provide benefit of payment at time of liquidation only to the extent of share capital subscribed by that person
b) yes bcz this make risk free investment there is no loss to personal property
c) due to laws restrictions or due to division of profits
d) due to benefit or private companies which are not found in public company
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