Please enable JavaScript.
Coggle requires JavaScript to display documents.
Advantages and disadvantages of being a public limited company - Coggle…
Advantages and disadvantages of being a public limited company
Advantages
Selling shares to the general public
Can sell shares to any member of the public, both individuals and others companies.
Allows them to raise considerable amounts of capital- far more than for any other type of legal ownership.
Limited liability
Shareholders of PLCs have limited liability, which limits the risk involved with a potential investment.
Managerial economies of scale
Are normally very large organisations that can afford to employ specialist directors to run the business behalf of the shareholders. These specialists improve the efficiency of the company.
Disadvantages
Legal issues
Are bound by more legal constraints than Ltd companies, and this can make them more complicated to run.
Releasing financial information
The company has a duty to supply them with up-to-date information about its performance.
It has to produce an annual report, which is normally available via its website and therefore visible to competitors.
Dividends
Are obligated to pay their shareholders dividends.
Finding the right balance between retaining enough profit to reinvest in the business and satisfying shareholders is difficult. If shareholders are not happy, they can vote to replace the company's director.
Lossing control
As shares are available to anyone in the general public, existing shareholders can be subject of hostile takeover binds and can lose control if an individual or business purchases 50% or more of the available shares.