Commerce Paper 2, May/June 2011  
Questions: 1 2 3 4 5 6 7 8 9 10 Main
General Comments

question 2

  1. Explain the following:
  2. Limited liability;
  3. Separate legal entity;
  4. Certificate of incorporation;
  5. Participating preference shares;
  6. Ordinary shares.
State five advantages of Public Corporation




This question was on the limited liability company and performance was fair. Most candidates could not explain participating preference share and certificate of incorporation was confused for certificate of trading. The following were expected from the candidates:
Participating Preference Shares: These are shares that allow holders to have further claim on the profit of the company after ordinary shareholders have received a specified amount of the dividend.
Certificate of Incorporation: This is the document issued by the Registrar of companies certifying the legal existence of a company after certain legal requirement for registration has been met.

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