Cards (7)

  • Private Limited Companies
    • Owned by shareholders, who have one or more shares in the business.
    • Shareholders have limited liability.
    • Shares are sold privately to investors who are already known to the business.
    • Aim to maximise profits, grow and increase market share
    • Controlled by a Board of Directors who are managed by a managing director.
    • Have to produce documents called the Memosadum of Association and Articles of Association.
  • Limited Liability
    • The owners personal positions are not at risk if the business gets into debts, as they only lose their investment in the company.
  • Advantages of private limited company
    • Shareholders have limited liability.
    • Capital can be raised by selling shares.
    • They do not have to disclose most the information the public limited companies have to provide.
    • Ownership aren't lost to outsiders as all shareholders are known.
  • Disadvantages of private limited company
    • Profits have to be split with shareholders by issuing dividends.
    • Legal process required to set up the company.
    • Shares cannot be sold quickly Publicly on the Stock Exchange, so there is limited source of capital available.
    • Financial accounts can't be kept private as they must be shared with the Companies House and are therefore made publicly available.
  • Public Limited Company
    • Owned by shareholders who have limited liability.
    • Must have a minimum of £50,000 share capital (usually a large company).
    • Controlled by a Board of Directors.
    • Can sell their shares through the stock market.
    • They aim to dominate the market, increase market share and market value.
  • Advantages of Public Limited Company
    • Shareholders have limited liability.
    • Large amounts of finance can be easily raised through the public sale of share.
    • Banks are very willing to lend PLC's money due to their size and reputation, as they are seen less risky.
    • Organisation has financial stability, enabling it to develop and expand.
  • Disadvantages of Public Limited Company
    • Dividends are shared with many shareholders.
    • Control of the business can be lost if anyone can buy shares of the stock market.
    • Annual account have to be published.
    • Setting up a PLC can be costly and complicated.
    • Employees can feel alienated from those at top.
    • They can grow so large that they cannot be managed affectively.