How To Manage A Limited Liability Company

In order to know how to manage a limited liability company, it is imperative that we know what a limited liability company is and the types of the company. A limited liability company is a company in which the obligation of its owners is limited to their contribution in terms of shares. there exist two types which are Public limited liability company and Private limited liability company.

Public limited liability company

 this is a company that firstly;has been registered with corporate affairs commission as a public liability company, and can offer its shares for sales to the public, that implies that they can have many part owners (shareholders)

Private liability company

this  is a company that has been registered with the corporate affairs commission as a private limited liability company and is restricted from selling shares to the public. they are owned by private investors.

A limited liability company should be treated as a legal person in itself, it takes care of its own debts as well as its losses, it is called 'limited' liability because once  the share holders have paid for the agreed amount of shares, then they have fulfilled their obligation. it means that the losses of the shareholders can be limited to only the amount they have paid for their shares. in starting up a limited liability company you have to understand how best you can manage the company as there will be new rules and you might have to also understand some few tricks to managing the company well.

Managing limited liability company

By law, the shareholders must elect a director (in case of a private limited liability) or 2 directors (for public liability) to manage the company on a daily basis. if the company is a small company, the board may have to be the management of he company, but in case of a a bigger company, the board may consist of like 10 directors out of hundreds of shareholders these might be determined by the amount of shares, experience, etc...

Corporate governance has to be considered also when managing a limited liability company, this is because there might be a conflict in the interest of both the shareholders and the directors,while the directors are looking forward to increased profit or dividends or re-investing in the company through increased shares, the directors might be having interest in increased pay, vacation holiday, increased in work packages, etc, this is a conflict of interest of the shareholders and the directors. if the directors are not well satisfied, knowing the amount that the company is worth, they might develop lackadaisical attitude to work, and this might fall the profit of the company, however, the shareholders also needs to have increase in their dividends if not, they might end up being discouraged into investing more funds, there are ,however, some guiding principles which should be followed to strike a balance, these are:

Accountability: this has to do with the defining of roles as well as the duties of the directors and also establishing an adequate monitoring process that will ensure that the activities of the the directors are monitored, the activities of the directors must be adequately accounted for

Disclosure: All the information that the directors have should be open to the shareholders, there should be no hidden information especially on the finances of the company, there should also be no hidden information on the welfare of the workers (especially in terms of packages).

Fairness: directors should not benefit from having access to inside information, especially when it is not available to the share holders, that has why the law has put a restrictions on directors having access to buying shares at the stock exchange. an example is that directors are not allowed to buy or sell shares immediately before the announcements of the trading results of the business, as the access to this kind of information will place the directors at a favorable edge over the shareholders.

if your limited liability company is well managed, you can be sure to have a well utilized company and follow these tips above, you can be sure of a profitable liability company, best of luck!!!

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