HOW PRIVATE AND PUBLIC LIMITED LIABILITY COMPANIES DIFFER IN CAMEROON
There are many illustrations of how private and public limited liability companies differ in Cameroon from one another. Companies, either private or public limited liability company, are the most widely used business organization in Cameroon. The Trade and Personal Property Rights Registry established by virtue of The OHADA Uniform Act Relating to Commercial Companies and Economic Interest Groups oversees the incorporation of private or public limited liability company in Cameroon. The OHADA has now expressly distinguished the features of a private limited liability company from the features of a public limited liability company.
There are certain advantages that companies enjoy over other types of business organizations. Advantages in this sense are different from the features of the company when compared to other business organizations. Some of them are highlighted below.
- Perpetual succession: a company once incorporated, enjoys perpetual succession. where the shareholders die, other persons will take over the shares.
- Limited liability: when it is a company that is either limited by shares, the liabilities of its members are limited.
- Investors for a company: investors invest in a company more than in any sole proprietorship and partnership.
- Efficient Management: in a company, the management can be different from the actual owners.
By virtue of The OHADA Uniform Act Relating to Commercial Companies and Economic Interest Groups, an incorporated company may be a company with the following;
- Having the liability of its members limited by the memorandum of association to the amount, if any, unpaid on the shares respectively held by them.
- Having the liability of its members limited by the memorandum of association to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up.
- Not having any limit on the liability of its members
A company of any of these types listed above may either be a private company or a public company. We shall now look at how private and public limited liability companies differ in Cameroon in their features.
Here we shall focus on the features of a private limited liability company in Cameroon
THE FEATURES OF A PRIVATE LIMITED LIABILITY COMPANY IN CAMEROON
- By the provision of OHADA, any two or more persons may form and incorporate a company by complying with the requirement of the Act, now with the re-enactment of the Act, one person can now form and incorporate a Private Company in Cameroon.
- A Private Company restricts the transfer of its shares to the public. The law provides that the Private Company shall not without the consent of all its members, sell assets having a value of more than 50% of the total value of the Company’s assets. It must, by its articles of association, restrict the transferability of its shares.
- More features of a private limited liability company are that the total number of members of a private company shall not exceed fifty (50), not including members who are bonafide in the employment of the company.
- Where two or more persons hold one or more shares in a private company jointly, they shall be treated as a single member. Thus, joint holders of shares are deemed to be counted as single members.
- A private company is not unless authorized by law allowed to invite the public to subscribe for any share or debenture of the Company or deposit money for a fixed period or payable at call, whether or not it is bearing interest.
- The name of a Private Company limited by shares must end with the word “Limited” or “LTD”.
- A private company does not need to keep certain statutory books like the Index of members.
- A private company has no restriction in the appointment of an over-aged director of (70yrs and above).
- The appointment of a Company Secretary is now optional for a Private Company in Cameroon.
- A Private Company limited by shares is most suitable and recommended where a small or medium-sized business needs to acquire an incorporated status with The Trade and Personal Property Rights Registry or where family members and/or friends intend to carry on business with an incorporated status with no interference from outsiders or where the capital available to start up the business is relatively small.
PUBLIC LIMITED COMPANY
A Public Company is any company other than a Private Company, and which is expressed in its Memorandum of Association to be a Public Company. The liabilities of its members must be restricted by the memo to the amount, if any, left on paid on the shares respectively held by them. It is but important that we identify some of the features of a public limited liability company in Cameroon.
FEATURES OF A PUBLIC LIMITED LIABILITY COMPANY IN CAMEROON
- A Public Unlimited Company must be registered with a share capital, not below the minimum issued share capital of 10.000.000(Ten Million) Francs.
- It can raise money from the public by offering its shares or debentures to the public and inviting them to subscribe. This makes it easier to raise funds through the capital market when it is listed on the stock exchange.
- By OHADA Act, to incorporate a Public Company, it must have a minimum of 2 members, but unlike a private company, there is no limit to its maximum number of members.
- It is mandatory for a Public Company to appoint a Company Secretary. The person who can be appointed the company secretary of a public company must be a legal practitioner.
- The OHADA Act provides that every Public Company must hold its statutory meeting within a period of six months from the date of its incorporation.
- A Public Company must publish additional notices of its Annual General Meeting and such notice must be given to all those who are entitled to receive it.
- The name of a public company limited by share must end with “Public Limited Company (PLC).
HOW PRIVATE AND PUBLIC LIMITED LIABILITY COMPANIES DIFFER IN CAMEROON: PRIVATE OR PUBLIC LIMITED LIABILITY COMPANY
The process of understanding how private and public limited liability companies differ in Cameroon can be derived when juxtaposed together.
- The memorandum of a Private Company state that it should be private while for a Public Company, its memorandum states it to be a Public Company. That is how private and public limited liability companies differ in Cameroon
- There is a restriction in the transfer of shares in a Private Company limited by shares; no such restrictions exist in a Public limited liability company. That is how private and public limited liability companies differ in Cameroon
- The number of members in a private company must not exceed 50; there is no such limit for a Public Limited Liability Company. That is how private and public limited liability companies differ in Cameroon.
- A private company unless authorized by law cannot invite the public to subscribe to its shares while a Public Company can offer its shares to the general public. That is how private and public limited liability companies differ in Cameroon.
- A Public Company is required by law to hold a compulsory statutory meeting within six months of its incorporation while a Private Company is not required to hold such a meeting. That is how private and public limited liability companies differ in Cameroon.
- Another difference between private or public limited liability company is that the appointment of a Company Secretary is mandatory for a Public Company and the qualification of the Company Secretary is specified. No such requirement is for a private company.
- Lastly, the difference between private or public limited liability company name of a Private Company limited by shares ends with Limited or LTD while a Public Company ends with a Public Limited Company or PLC.
The key points of differences between a Private and Public Limited Liability Company have been highlighted above. These differences should act as a guide in deciding which type of business organization to form or incorporate in Cameroon. However, it is noteworthy to state most companies often begin as Private companies in Cameroon; it is only after years of successful or profitable operations as Private Companies that some interested companies change their incorporation status to Public Companies, so as to open rooms for public investors or shareholders.
Article by Barr. Mafany victor Ngando
Kinsmen Advocates Law Firm
“The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance”