public limited liability companies are democratic in nature because?

Step 1: Analyze the question The question asks why public limited liability companies (PLCs) are described as democratic in nature. "Democratic" means the people affected have a say through voting and representation.

Step 2: Explain the concept A PLC is owned by shareholders, who buy shares that are traded publicly (for example, on the Nigerian Exchange). Ownership and management are separate:

• Shareholders own the company.
• A board of directors manages it on the shareholders' behalf.
• At the Annual General Meeting (AGM), shareholders vote to elect or remove directors, usually with one vote per share held.

This is similar to how citizens vote for representatives in a democracy.

Step 3: Evaluate the options

• A. Government appointees are members of the board. Wrong. Appointees are typical of public corporations (state-owned enterprises), not PLCs, and appointment is not democratic anyway.
• B. They are run by elected public officers. Wrong. PLCs are private-sector firms, not run by public officers.
• C. Electoral principles are adopted in the day-to-day management. Wrong. Day-to-day management is handled by appointed professional managers, not by elections.
• D. Shareholders elect the board of directors. Correct. This is the voting and representation element that makes a PLC democratic.

Step 4: Answer The correct option is D.

Exam tip: When you see "democratic" in a company question, think "shareholders vote": they elect directors at the AGM. Also remember that "government appointees" points to public corporations, not PLCs.