Advantages and disadvantages of a public limited company

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Advantages and disadvantages of a public limited company

Advantages

  • Able to raise capital for expansion by selling additional shares
  • Higher status than a public limited company so will benefit from more publicity.
  • Share prices listed on the stock exchange so shareholders ca work out the value of their shares. They can buy or sell shares.
  • Limited liability for shareholders.

Disadvantages

  • Original owners lose control and ownership of the business.
  • Professional directors and manager appointed to run the business may have different aims to those of the shareholders.
  • Must disclose all main accounts to the public. These are often greatly publicised by the media.
  • Company can be taken over if a majority of shareholders agree to bid.

Evaluation

These advantages and disadvantages have to be taken into account when analysing how the business operates and whether or not being a public limited company is suitable for the business.

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