By: Mark Kennan. A company is a legal entity and a juristic person established under the Act. As well as share capital, a public limited company will often find itself in a better position when looking at other potential sources of finance. Perpetual Existence: Deaths, insanity, insolvency of shareholders or directors do not affect the company’s […] The company’s share price represents the value of the company as viewed by the market, and (potential) investors will usually expect a healthy return. Under a PLC, losses suffered by the investors will be limited to the amount that they have invested in the company. The PLC, also known as a publicly held company, can issue shares to the public. Distribution of powers; The shares of a public limited company can be bought by anyone, thereby increasing the number of members. Advantages of a Limited Company … With shares being freely transferable, a potential bidder can build up a shareholding in advance of launching a bid attempt. Pay off or replace any existing debt with suitable terms. While often more imagined than real, this perception of being more established, larger or more powerful can affect the behaviour of customers, suppliers and employees. But the required level of transparency is much higher for public companies. The capital raised from public issue of shares is always more than what is raised by private companies because a significant number of the public buy in to the company. county. The transferability of these shares gives shareholders some level of comfort because they do not feel bound to remain with the company. James B. Gambrell, Chairman of Silent Sensors Limited, The system deals with everything from the basics to the most complex of share re-organisations, Roger Mills, Tax Assist Accountant in Bourton on the Water. The value of being able to raise finance is in how it can be employed to serve the business. There are many advantages that come with being a limited company, these include: Limited liability ; In the world of business things can go wrong, a huge benefit that comes along with being a limited company is that you’ll receive the financial security which will help you to sleep easy at night. 07887285. This is particularly relevant if a majority of shareholders agree to a takeover bid. ease the administrative burden of corporate life. Inform Direct company secretarial software will This field is for validation purposes and should be left unchanged. It helps managers design the relevant marketing strategies for each stages of the PLC. Higher transparency especially around the books of accounts. Therefore, an entrepreneur will have to choose the type of company depending upon the funding plans. ADVERTISEMENTS: Advantages of PLC: PLC is a valuable concept in marketing. 2. A complete breakdown of limited company advantages and disadvantages. Advantages & Disadvantages of a Public Company. By: Mark Kennan. Disadvantages of a Limited Company. This type of business structure is a limited company that is formed in the United Kingdom (UK). Public companies are subject to many day-to-day legal requirements and regulations which are highly onerous. Institutional shareholders on the other hand can use their level of influence to control the adoption of some standards or policies in return for their investment. Under a PLC, losses suffered by the investors will be limited to the amount that they have invested in the company. In the United Kingdom and the Republic of Ireland, a public limited company performs a similar role as a corporation does in the U.S.. Public limited companies hold advantages and disadvantages for their British owners much like American corporations do for their owners. Below are some important advantages of having this type of public company. This section will focus on the some of the most critical advantages that PLCs offer any other business model. The most obvious advantage of being a public limited company is the... 2 Widening the shareholder base and spreading risk. Apart from the initial commitment, other associated costs especially in the formative stages are significantly higher especially when the company has complex requirements plus the need to pay investment and legal professionals to advise and manage the process of getting listed on the stock exchange. The ownership of a limited company is divided up into equal parts called shares. Advantages of Public Limited Company (PLC) Public limited companies have contributed a lot to economic growth and development in a country. If the company’s shares are to be listed on an exchange, it will typically pay legal and investment professionals to advise and manage the listing process. They want to start a business together but they are quite uncomfortable with forming a partnership since in that case, they will be personally liable for the debts of the business. The principal reasons for trading as a limited company are limited liability, tax efficiency, and professional status. Elsewhere, we look at the advantages and disadvantages of a plc compared to a private limited company. Just by the fact that a company has the suffix PLC at the end of its name already gives it some level of prestige. Rubious. Therefore, if you feel unsure of your best course of action, be sure seek the wise consult of an accountant or solicitor to give you detailed information you require depending on your needs. Advantages and Disadvantages of Sole Proprietorship. Advantages of a Private Limited Company Increased Liability: Taking a private company public increases the potential liability of the company and its officers and directors for mismanagement. More attention An important part of managing an unlisted plc in the UK is keeping its statutory books and filings up to date. Tesco is a public limited company and there are numerous benefits and constraints when forming a public limited organisation. There is need for having at least two directors. The PLC, also known as a publicly held company, can issue shares to the public. So, some disadvantages of a public limited company are; High Costs.