ZIMSEC O Level Commerce Notes: Business Organisations: Advantages and Disadvantages of Public Limited Companies
- 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.
- 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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