PLC (16 Marker)

Question 1

What is a PLC?

Answer 1

A company that is able to offer its shares to the public

Question 2

What are the requirements s PLC must meet?

Answer 2

Minimum shareholders is two
Minimum directors is two
Accounts must be filed within 6 months of the year end
Company Secretary must be a qualified person

Question 3

Advantages of a PLC

Answer 3

Better access to capital - Raising share capital from existing and new investors
Liquidity - Shareholders are able to buy and sell their shares
Value of shares - Value of the firm is shown by the market capitalisation (based on share price)
Opportunity to more easily make acquisitions
To give a company a more prestigious profile

Question 4

Disadvantages of a PLC

Answer 4

Once listed on the stock exchange, the company is likely to have a much larger number of external stakeholders, to whom company directors will be accountable

Financial markets will govern the value of the company through the trading of company’s shares and will represent the markets view of the company’s performance overtime

Greater public scrutiny of company’s financial performance and actions