Tuesday 3 January 2012

Public and Private Limited Companies

  • Each company has its own identify in law
  • the company employs staff, not the owners
  • the company owns assets not the owner
  • the company operates until in formally wound up/ liquidation
  • the company pays co-operation tax on its profits
PRIVATE

ADVANTAGES

  • limited liability
  • minimum of 1 director + 1 shareholder
  • easy to set up/ affairs still private
  • easier to raise capital/ borrow from bank
  • death of shareholder has no effect on company
DISADVANTAGES
  •  cannot sell shares to public
  • more regulations to comply with
  • account procedures may be more costly
  • death of shareholder has no effect on company
  • share transfers need agreement of all
PUBLIC 

ADVANTAGES
  • limited liability
  • increased capital as public can buy shares
  • min of 2 directors + 2 shareholders
  • shares increase in value if company sucessful 
  • operating large scale can lower cost per unit
DISADVANTAGES
  • many regulations to comply with
  • accounts (and problems) are public knowledge
  • shareholders may sell shares of dividends porr
  • original owner may lose overall control

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