Econet is an example of a PLC

Econet is an example of a PLC

ZIMSEC O Level Commerce Notes: Business Organisations: 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.

To access more topics go to the Commerce Notes page.

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