Public Limited Companies Flashcards
Describe the features of a public limited company
Owned by shareholders who have limited liability.
Controlled by a board of directors.
Financed by share equity through selling shares on the stock market as well as bank loans or grants.
Describe the advantages of public limited companies
Shareholders have limited liability meaning that if the business goes into debt the owners personal possessions are not at risk and the owner will only lose what they invested.
Large amounts of finance can be raised through the public sale of shares.
It is easy to borrow finance due to a PLC’s size and reputation, so less risk for banks.
PLC’s can easily dominate the market.
Describe the disadvantages of public limited companies
Dividends are shared with many shareholders.
Control of the business can be lost as anyone can buy shares on the stock market.
Annual accounts have to be published.
Setting up a PLC is costly and complicated.
