WAEC Commerce 2013 Theory — Question 2

Model answer

(a) Features of public corporations: It is owned by the tax payer/government. It is established with the aim of maximizing welfare of the populace. No tax is charged. It is limited by guarantee in most cases. It is mostly a monopoly. (b) Sources of capital available to a limited liability company: Offer of ordinary shares for subscription: this is a unit of ownership in a limited liability company. The management of the company can issue ordinary shares to raise capital for the company. Issue of preference shares: this include shares that have fixed rate of dividends. Debentures: this is a document which specifies the indebtedness of a company to the bearer. The holder received a fixed interest. Also, the company can use its reserves and convert it to shares for capital. Also, the company can apply for long-term loan from banks.