Public Limited vs Government Companies
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Questions and Answers

What is the main aim of government-owned companies?

  • To provide public and merit goods (correct)
  • To maximize shareholder profit
  • To raise capital through stock sales
  • To minimize operational costs
  • How do public limited companies primarily raise funds?

  • By obtaining government grants
  • Via internal savings
  • Through selling shares at the stock exchange (correct)
  • By taking bank loans
  • Which of the following is a feature of public limited companies?

  • Focus on providing public goods
  • Limited to government ownership
  • Management appointed by the minister
  • Shareholders are members of the public (correct)
  • What is a potential drawback of a centralized business structure?

    <p>Limited personal growth for branch managers</p> Signup and view all the answers

    Which of the following describes a potential consequence of prolonged hierarchies in management?

    <p>Greater distance between senior managers and employees</p> Signup and view all the answers

    What characterizes businesses in the informal sector?

    <p>They do not pay taxes and remain unregistered</p> Signup and view all the answers

    Which of the following best describes the ownership structure of government-owned companies?

    <p>The government is the sole shareholder</p> Signup and view all the answers

    What is a disadvantage of administrative diseconomies in a business?

    <p>Higher operational costs due to complexity</p> Signup and view all the answers

    What does 'limited liability' signify for shareholders in a company?

    <p>Shareholders can only lose the amount they invested in the company.</p> Signup and view all the answers

    Which of the following is a characteristic of a public limited company?

    <p>Shares can be traded publicly through a stock exchange.</p> Signup and view all the answers

    What is a primary function of the stock exchange?

    <p>To facilitate the buying and selling of shares in public companies.</p> Signup and view all the answers

    In a public limited company, who typically elects the board of directors?

    <p>The shareholders.</p> Signup and view all the answers

    What does having a legal personality mean for a company?

    <p>The company can sue and be sued in its own name.</p> Signup and view all the answers

    Which statement is true about shareholders in a company?

    <p>They receive dividends based on the number of shares they own.</p> Signup and view all the answers

    What is one way in which private companies differ from public companies?

    <p>Private companies generally have fewer shareholders.</p> Signup and view all the answers

    When shareholders invest in a company, what do they acquire?

    <p>A share, which represents a portion of ownership in the company.</p> Signup and view all the answers

    What is the maximum number of shareholders allowed in a private limited company?

    <p>50</p> Signup and view all the answers

    Which feature distinguishes private limited companies from public limited companies regarding share transfer?

    <p>Owners can decide who can buy shares</p> Signup and view all the answers

    Which of the following statements about ordinary shares is correct?

    <p>Dividends depend on the company's profits</p> Signup and view all the answers

    Which of the following is a mandatory requirement for a private limited company?

    <p>A minimum of one director</p> Signup and view all the answers

    What typically characterizes the ownership structure of private limited companies?

    <p>They are mostly owned by family members or friends</p> Signup and view all the answers

    During which event are shareholders elected to the board of directors in a company?

    <p>Annual General Meeting (AGM)</p> Signup and view all the answers

    How did preference shares differ from ordinary shares in terms of dividends?

    <p>Preference shares usually earn fixed dividends before ordinary shares</p> Signup and view all the answers

    What does the (PTY) Ltd suffix in the name of a company signify?

    <p>Private ownership limited to a specific number of shares</p> Signup and view all the answers

    Study Notes

    Government Owned Companies

    • Sole shareholder is the government.
    • Minister appoints the board of directors, who then appoint managing directors.
    • Examples include TransNamib, Telecom, and Nampost.
    • Primary objective is to provide public and merit goods.

    Public Limited Companies

    • Shareholders are typically members of the public.
    • Main aim is profit generation.
    • Funds are raised by selling shares on the stock exchange.

    Informal Sector

    • Comprises businesses unregistered with the ministry of trade and industry.
    • Do not pay taxes; examples include hawkers and traders/producers.

    Effects of Business Structure Changes

    • Communication issues may arise from a complex management hierarchy.
    • Senior managers might become disconnected from employees, impacting morale.
    • Centralized structures restrict the autonomy and decision-making of branch managers.
    • Potential for diseconomies of scale can occur due to excessive administration and management layers.
    • Increased costs from internal communication processes and varied management structures can hinder efficiency.

    Limited Companies / Joint Stock Companies

    • Defined as a group of individuals joining to generate profit.
    • All limited companies offer limited liability, protecting individual owners from company debts.
    • Companies possess a legal personality distinct from their owners.
    • Capable of owning assets, entering contracts, sustaining continuity, and engaging in legal actions.
    • Ownership is represented through shares, providing rights to profits.
    • Shareholders elect a board of directors to manage the company.

    Public Limited Company Features

    • Comprises a minimum of 7 shareholders; no upper limit.
    • Company name concludes with "Ltd".
    • Shares can be sold publicly through stock exchanges.
    • Requires a minimum of two directors.
    • Shareholders convene at annual general meetings to appoint the board of directors.
    • No restrictions on share transfers, promoting liquidity.
    • Ownership and management are distinct; shareholders are usually not the managers.

    Private Limited Company Features

    • Typically smaller, often owned by family and friends.
    • Maximum of 50 shareholders permitted.
    • Requires at least one director.
    • Name ends with "(PTY) Ltd," indicating proprietary limited ownership.
    • Shares cannot be sold publicly; transfer is restricted.
    • Owners typically actively participate in management roles.

    Differences Between Public and Private Limited Companies

    • Public companies sell shares; private companies do not.
    • Public companies must publish financial accounts; private companies have no such requirement.
    • Public companies can have unlimited shareholders; private companies are capped at 50.
    • Public companies use "Ltd" in their name; private companies use "(PTY) Ltd".

    Types of Shares

    • Shareholders receive dividends from profits earned.
    • Main types of shares are ordinary and preference shares.

    Ordinary Shares

    • Holders have voting rights during the Annual General Meeting (AGM).
    • Dividend payouts are variable and depend on the company's profits.
    • No dividends are given if the company incurs a loss.

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    Description

    This quiz explores the differences between public limited companies and government-owned companies. It highlights key characteristics like ownership, governance, and main objectives, providing examples of each type. Test your understanding of these business structures!

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