Presentation on theme: "Public and Private Limited Companies PLC’s and Ltd’s."— Presentation transcript:
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…. Sole traders and partnerships have unlimited liability… THEREFORE
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
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
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
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
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!