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Public and Private Limited Companies

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….

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Public and Private Limited Companies

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  1. Public and Private Limited Companies PLC’s and Ltd’s

  2. 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

  3. 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

  4. 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

  5. An example of a Ltd…

  6. 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

  7. Example of PLC

  8. 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

  9. 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!

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