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

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Presentation on theme: "Public and Private Limited Companies PLC’s and Ltd’s."— Presentation transcript:

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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