1.2b Limited Companies Flashcards
Do limited companies have limited or unlimited liabilities?
Limited
Who owns limited companies?
The shareholders
Who can Ltd companies sell shares to?
Family members and acquantances
Who can Plc companies sell shares to?
Anybody
Advantages of Ltd company
- Limited liability
- Can raise finance through shares
- More privacy than Plc
Disadvantages of Ltd company
- Public disclosure of information
- Shareholders have to be paid a dividend
- Can only sell shares to certain group of people
Advantages of Plc
- Limited liability
- Easier to raise finance from stock exchange
- Suppliers are more willing to offer credit
Disadvantages of Plc
- Financial information has to be published
- Greater scrutiny of activities
- Could lose control if over 50% of shares owned by others
Advantages of switching from Ltd to Plc
- Larger pool of potential owners and capital
- Higher profile
Disadvantages of switching from Ltd to Plc
- Answerable to shareholders
- Plc shareholders tend to be in it for short-term profits
Advantages of switching from Plc to Ltd
- More privacy
- No pressure of varying share prices
Disadvantages of switching from Plc to Ltd
- Long and expensive process of buying out all existing shareholders
Requirements for a PLC
- Must have at least two shareholders, two directors and a company secretary
- Share capital of over £50,000 must be raised when selling shares
What important documents must be drawn up before a company can start trading?
- The memorandum of association
- The articles of association
How can PLC’s become LTD’s?
- Take over by a LTD
- Management buy-out
