Advantages and Disadvantages of a Public Limited Company

• Public Limited Companies have several advantages and disadvantages

Advantages

• Can raise more capital when compared to private limited companies
• Have limited liability which means they cannot lose private assets in settlement of company debts.
• There is continuity after the death of a member.
• Enjoy economies of scale.
• Shareholders can freely sell their shares without consulting anyone.

Disadvantages

• There is risk of loss of control and hostile takeovers.
• They are required to publish their accounts which may give competitors an insight into their more confidential operations.
• Decision making is complex and convoluted because a lot of shareholders have to be consulted.
• Complex formation procedures and difficult requirements for example a company has to first trade for five years before it is allowed to list of the Zimbabwe Stock Exchange.
• Are required to hire external auditors which add to the expenses of running a company.
• They suffer from Dis-economies of scale

To access more topics go to the O Level Business Notes page.