A firm is said to be a public joint-stock company when it

Step 1: Analyze the question The question asks what makes a firm a public joint-stock company, which is also called a public limited company (PLC).

Step 2: Explain the concept A joint-stock company raises capital by dividing ownership into shares. A public joint-stock company offers those shares to the general public, usually through the stock exchange, such as the Nigerian Exchange (NGX). Its main features are:

• Ownership is by shareholders, who can be any members of the public.
• Shareholders have limited liability, so they can lose only what they invested.
• Shares can be transferred freely.
• It is managed by a board of directors elected by the shareholders.
• It has a separate legal personality and continues to exist even if shareholders change.

Step 3: Evaluate the options

• A. Unlimited liability: Wrong. Shareholders have limited liability. Unlimited liability applies to sole proprietorships and ordinary partnerships.
• B. Administered by the public: Wrong. It is run by directors, not by "the public."
• C. Owned by the government: Wrong. This describes a state-owned enterprise or public enterprise.
• D. Operates as a public corporation: Wrong. A public corporation, like NNPC or PHCN historically, is a government-owned body set up by law. It is different from a joint-stock company.
• E. Sells its shares to members of the public: Correct. This is the defining feature of a public joint-stock company.

Step 4: Answer

Tip: Remember "public company = public shareholders." Do not confuse public company (shares sold to the public, private ownership) with public corporation (owned by government). In exams, the word "shares" usually points to a joint-stock company.