What are the merits and demerits of Public limited companies?

Answer 1

I think the person below is getting confused with a Private Limited Company (Ltd). A Public Limited Company (Plc), like Tescos for example, can sell their shares on the Stock Market, unlike a Private Limited Company, which can only sell shares, or equity, privately.

Pros -

• Limited Liability. You would only loose the money you invested into the business. Your personal assets, such as home and car, are not at risk unless you used them for collateral.
• Opportunity to raise capital through issuing shares.
• Appears more professional and credible.
• Easier to sell than a sole trader or partnership.

Cons -

• Harder to set up. You will need to file documentation at the Registrar of Companies, including Memorandum of Association and Articles of Association. You will also need to register a business name and submit your final accounts to Companies House. This is why a solicitor and accountant are highly recommend.
• You would have to share the profits with other shareholders through dividends.
• Less control. Shareholders have a say. They elect directors who then appoint managers.
• More expenses. You will need to hold shareholder meetings every year. Director meeting will also need to be minuted and held if shareholders want to view them.
• Income is taxed on two levels. Corporate level (i.e. corporation tax) and personal level on dividends.

Hope this helps anyone who looks at this. I must disclaim that I am not a solicitor or an accountant, so I highly recommend that you seek their advice and support before you take the step of becoming a Plc.

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i have a couple pros but no cons

The company makes a lot more money because it has other outlets, the business has shareholders which provide money and invest in the business/company, money can be made from selling shares, companies are more prepared to deal with a ltd company it was my homework

I am just going to add two pros and one con: (Hassan Ghaddar)

Pros:

1) PLCs benefit from specialization as they have the ability to attract highly skilled managers (managerial economies) with high salaries. Each business department would have its own specialist manager which leads to a more dynamic and productive workforce.

2) PLCs normally find 'economies of scale' very advantageous. Such companies operate on a large scale and this reduces the average unit cost. PLCs are also able to diversify their product mix and spread their risks.

Con:

1) There is a larger chance of being taken over because of the various number of shareholders. As a result it is logical to say that the original owner and management group will lose a degree of control. It is also possible that the new organisation would suffer from a cultural clash with difficulties which would most probably lead to a business conflict and/or dilemma.

Answer 2

MERITS

they can easily get finance in the form of equity and loan

limited liability obviously, if the company liquidates, personal property of shareholders not use to pay off debts

DEMERITS

a lot of administration and dilution of control