Advantages and Disadvantages of Public Limited Companies

Advantages

• They are separate legal entities.
• Shareholders have limited liability.
• Shares can be freely transferred on the stock exchange.
• Membership is open to the public since shares are sold and bought on the Zimbabwe Stock Exchange.
• More capital can be raised since there is no limited to the number of shareholders.
• There is continuity even if one member dies or leaves the business.
• The company has more borrowing capacity.
• Employees can be made more loyal through share schemes.

Disadvantages

• Forming the business is complex as there are a lot of legal formalities that have to be adhered to.
• Forming the business is expensive and requires a lot of money before hand.
• Financial affairs are made public.
• There is delayed decision making due to bureaucracy.
• Separation of control and ownership might result in conflict of interest.
• There are legal restrictions on what the company can and cannot do in terms of operations.
• There is double taxation of the trading profits at company and shareholder level.
• As the company grows it becomes difficult to manage.
• Large amounts of capital are required.
• There is risk of a takeover.

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