Limited Companys LTD/PLC Flashcards
What is a limited company?
This is a business that is owned by SHAREHOLDERS and controlled by DIRECTORS.
There are two types of limited company:
private limited company (‘Ltd’) and public limited company (‘plc’)
What are the factors of a limited company?
The profits are paid to the shareholders and are called DIVIDENDS.
The owners of limited companies have LIMITED LIABILITY.
What is limited liability?
This means that if the company fails, the most that shareholders lose is what they have paid for their shares. They do not need to contribute any more money to pay the company’s debts.
What is a private limited company LTD
Private limited companies cannot sell their shares on The Stock Market
They are often owned by people who know each other, such as family or friends. They are usually smaller than public limited companies.
What are the advantages of being in a Private Limited Company Ltd?
More capital can be raised by selling shares
The owners have limited liability (unlike a sole trader or a partnership)
What are the disadvantages of being in a Private Limited Company LTD
The profits have to be shared between the shareholders
It is slower and more expensive to set up than a sole trader or partnership
The original owners can lose control if they own less than 50% of the shares
Anyone can find out the financial position of the company from Companies House
What is a Public Limited Company?
Public limited companies can sell their shares on the Stock Market. Anyone can buy shares in them.
They are usually larger than private limited companies.
What are the advantages of being in a public Limited Company PLC?
Large amounts of capital can be raised by selling shares through The Stock Market
The capital can be used to pay for expanding the company.
Expanding the company should lead to higher profit
What are the disadvantages of being in a public Limited Company PLC?
The profits have to be shared between large numbers of shareholders
The original owners will probably lose control, because they will now own less than 50% of the shares in the company.
Changing from Ltd to plc is a very expensive process
Anyone can find out the financial position of the company from the company website
