Econet is an example of a PLC. Image credit techzim.co.zw

Econet is an example of a PLC. Image credit techzim.co.zw

ZIMSEC O Level Business Studies Notes: 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.

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