Public Limited Company – Advantages & Disadvantages
Advantages
Limited liability for shareholders.
Separate legal identity — company continues even if a shareholder dies.
Can raise very large amounts of capital — unlimited number of shareholders.
Shares can be freely bought and sold — no restrictions.
Has high status, making it easier to get:
Credit from suppliers
Loans from banks
Disadvantages
Complicated and time-consuming legal steps to form the company.
More regulations and controls — must publish accounts for the public.
Selling shares to the public is expensive, because:
A merchant bank is hired and charges a commission
Printing and publishing thousands of prospectuses costs money
Original owners may lose control when the company “goes public”, even if they become rich from selling shares.
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