LTD's and PLC's

Question 1

Private Limited Company (LTD)

Answer 1

:A company that cannot sell shares to the general public, but they can sell shares to their friends

Question 2

Public Limited Company (PLC)

Answer 2

Public limited company is a company which has been floated on the stock exchange and anyone can buy shares in the company

Question 3

Pros of a LTD

Answer 3

Limited liability
Continuity
Legal identity
Ease of buying and selling shares of shares for shareholders- this encourages investment in plcs
Access to substantial capital sources due to the ability to issue a prospectus to the public and to offer shares for sale (called flotation)

Question 4

Cons of LTD

Answer 4

Not as much profit as you have to pay corporation tax
Not as much revenue as shares cannot be sold to the public
Profits are shared
Legal formalities in formation
Cost of business consultants and financial advisers when creating such a company
Share prices subject to fluctuation
Legal requirements concerning disclosure of info to shareholders and the public, for example annual publication of detailed report and accounts
Risk of takeover

Question 5

Pros of PLC

Answer 5

Limited liability 
Separate legal identity 
Continuity 
Easy to buy and sell shares 
Access to substantial capital 
Benefit from economies of scale 
Lower unit costs 
Still remain small minimum 2 directors and 2 shareholders

Question 6

Cons of a PLC

Answer 6

Risk of take over
Cost of business consultants and financial advisors high when creating a company
Share prices subject to fluctuation
Directors subject to short-term objectives of major shareholders. Legal requirements concerning disclosure of information
Must publish annual reports
Conflicts of interest between shareholders and board of directors