Dear Editor,
Company can be dated back to 1613 – the most famous was the Dutch East India Company. It is important to share information with the public about companies, because they enjoy limited liability, and are legal entities separated from their owners. They are also protected by law.
A company is a legal entity – meaning it is an incorporated body separated from the people owning it. It is referred to as an artificial person, possessing only the rights granted to it by its charter. It is a legal person, and an entity in its own right. Situations can arise between who is a natural and an artificial person in event of citizenship. These terms are clearly defined in the constitution of the land.
A company can own property, contract in its own name, sue or be sued in its own name. The shareholders of private and public companies enjoy limited liability, whereas, sole trader and partnership businesses enjoyed unlimited liability.
Companies and corporations are protected by law. A public company is required to have two shareholders. A private company may have one shareholder. A private company is usually controlled by family members, where a sole shareholder is the only director, will make contract with other organizations. It is illegal for a private company to advertise its shares to the public.
A public company usually has an authorized share capital fixed at about $50,000, and must have the words “Plc” at the end of it. A company can wind-up, if the shareholders sell their shares and another shareholder buys them out. Companies limited by guarantee are formed for non-profit-making purposes, and are not required to file their accounts at the Register of Company.
Holding and Subsidiary companies: A holding company is the parent company. It is the one with the majority of shares in the other company. A holding company may have more than one subsidiary company. When a company finds interest in another company, and decides to buy out most of the shares in the outside one, the company with the majority of shares is the holding company. The holding company must prepare the group consolidated balance sheet and the profit and loss accounts of it and its subsidiary undertakings.
A subsidiary company is the one with the minority shares or the “Minority interest”. The subsidiary must provide on their balance sheet the amount owing to fellow subsidiaries and for the holding company. Nowadays companies find interest in other companies, and decided to purchase the majority of shares in the other company. This is quite legal.
Similarly, public corporations may also find interest in other organizations, and become the majority shareholders as well.
There is always the possibility that a public corporation owned by the population will be privatized. Privatization can be done if the state corporation wants to be privatized, Telecommunication and Cable TV Services is a good example. One is public and the other is private.
The problem is that the holding company in this case will have to follow the accounting principles of the private sector businesses, as private or public limited liability company. They must follow the legal requirements set by parliament if they are public corporation, or the statutes laid down in the company Act for private sector businesses. This is a complicated process, and students should research these organizations’ objectives before deciding to go into one of these businesses.
Other types of company available to the general public are: Unit Trust, Investment Trust, Insurance, Factoring, and Cooperatives.
Joseph Harvey
