public and private limited companies
DESCRIPTION
Public and Private Limited Companies. PLC’s and Ltd’s. Limited Companies. Sole traders and partnerships often wish to expand Sometimes they are held back by a lack of capital Also, partnerships can only take on a specific number of people…. - PowerPoint PPT PresentationTRANSCRIPT
Public and Private Limited Companies
PLC’s and Ltd’s
Limited Companies
Sole traders and partnerships often wish to expand
Sometimes they are held back by a lack of capital
Also, partnerships can only take on a specific number of people….
Sole traders and partnerships have unlimited liability…
THEREFORE
THE SOLUTION IS:
To form a limited liability company (Ltd.) Sell shares to investors
The 2 types of limited company are:
Private limited company Public limited company
Private Limited Company
Uses Ltd after its name Shares are sold mainly to friends and
family of the owners Shares not offered to the public The majority of the shareholders make
the decisions Minimum number of shareholders is 2 Minimum amount of share capital is £2
to start up
An example of a Ltd…
Public Limited Company
Uses PLC after their name Shares are open for sale to the public Shares are traded on the stock
exchange PLC must have at least £50,000 of share
capital to start up Managers control how the company is
run
Example of PLC
Advantages of Limited Companies
Limited Liability Encourage investment from shareholders
Finance can be raised quickly from selling shares
Usually bigger than partnerships and sole traders, better reputation for borrowing money
Continuity
Disadvantages of Limited Companies
Main director is overruled by shareholders Share prices might go down
Investors might stop giving you money Information is open to the general public
Costly (£100,000 to produce an annual report and accounts)
Lots of paperwork to be drawn up… Shareholders have majority
votes….owners could be voted out!