Private Limited Companies Flashcards
What are the features of a private limited company?
Owned by 1-50 private shareholders.
Controlled by a board of directors.
Financed by share equity but can also apply for bank loans and grants.
Describe the advantages of a private limited company
Owners (shareholders) have limited liability meaning if the business goes into debt the owners personal possessions are not at risk and they will only lose what they invested.
Ownership is not lost to outsiders.
The business usually retains a close and tight-knit, friendly feel with a high level of customer service.
Expertise and business acumen are gained from an experienced board of directors.
Describe the disadvantages of a private limited company
Profits have to be spilt with many shareholders by issuing dividends.
A complicated legal process is required to set up the company.
A limited source of capital is available as shares are not sold publicly.
Financial statements have to be shared with Companies House (and therefore made publicly available), meaning profits are not kept private.
