Private & Public Limited Companies

• What are private limited companies?

  Companies with restricted ownership and shares
• What does it mean that shareholders must agree to sell shares in a private limited company?

  It ensures control over share distribution
• What suffix do private limited companies have in their name?

  Ltd
• What are the advantages of private limited companies?

  • Limited liability for shareholders
  • Control over management due to share restrictions
  • Easier access to loans compared to partnerships
• What are the disadvantages of private limited companies?

  • Upfront costs for incorporation
  • Legal obligation to publish accounts annually
• What is a public limited company?

  Companies that sell shares on the stock exchange
• Why do companies become public limited companies?

  To raise finance for investment and expansion
• What is the process called when a company goes public?

  Flotation
• What are the advantages of public limited companies?

  • Ability to raise money for investment
  • Easier capital raising from banks
  • Limited liability for shareholders
• What are the disadvantages of public limited companies?

  • Limited control for owners over business operations
  • Risk of takeover by shareholders
  • Public access to company accounts
• How does the ownership structure of public limited companies affect control?

  Shareholders have limited say in management
• What happens if a shareholder owns more than half the shares in a public limited company?

  They gain complete control over the company
• Why must public limited companies publish their accounts?

  To provide transparency to investors and competitors