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Choosing to become a public limited company (PLC) is only but a natural business process when a business feels that there are more business benefits that could accrue to them through the PLC model than any other model. What is a Plate Load Test and why is it done? The main characteristic and advantage of a public limited company is that you can raise capital through external investors, in essence, offering shares in your company to the public. In the case of a limited company, only the profits are subjected to tax and the tax rate is lower than that of a sole or partnership company. Therefore, the possibility of the initial founders and directors loosing control over the direction the company takes is higher since they may spend a lot of their time either managing shareholder expectations or facing disputes. Therefore, if you feel unsure of your best course of action, be sure seek the wise consult of an accountant or solicitor to give you detailed information you require depending on your needs. Having higher share capital requirements. Advantages of a limited company. While the benefits of being a public company can be many, it is not a decision that should be made quickly, or without considering all the advantages and disadvantages. What are the advantages of a public limited company? Holding AGMs is a must unlike in private companies where decisions are often made through resolutions. Meanwhile many companies limited by shares are formed as private companies, you may get to know through this article about the advantages and disadvantages of a public limited company. Therefore, if early investors choose to dump their shares in the company to achieve some profits, the company still remains with a considerable stake in the company without feeling a significant dent in operations. The company and its management can be sued for self-dealin… Even as an individual, you try to reduce the tax amount by lowering the taxable income. Pursue new markets, products and projects. Top 10 limited company advantages The principal reasons for trading as a limited company are limited liability, tax efficiency, and professional status. It’s well known that a limited company is more likely to be tax efficient compared to a sole trader, and that is one of the many reasons it’s a popular business model. A public limited company (PLC) is a type of business entity whose shares can be publicly traded via stock exchanges, but whose liability is limited. Selling shares to the public means that anyone can invest in your company, meaning greater options for where to source value funds. This only means that the business fails to achieve the best results especially in the long run. Greater levels of transparency especially with the books of accounts. Public limited company advantages and disadvantages. Some of these restrictions include: Hostile takeovers do happen and it is not new in this business model. These are just but a few of the advantages and disadvantages of PLCs. Advantages of a Private Limited Company Increased Liability: Taking a private company public increases the potential liability of the company and its officers and directors for mismanagement. Public companies also contribute to the growth of financial institutions and banks. Advantages of a company include that: liability for shareholders is limited; it's easy to transfer ownership by selling shares to another party; shareholders (often family members) can be employed by the company; the company can trade anywhere in … There is continuity after the death of a member. Recognizing 7 shareholders and 3 directors; For Public Limited Company Registration, a Obtaining a trading certificate from the regulatory body. The fact that there is a wide base of shareholders each holding shares, means that the risks of the company are spread to the shareholders. We do not guarantee that the loan terms or rates listed on this site are the best terms or lowest rates available in the market. Converting to a PLC gives a company the ability to raise more capital and at the same time have access to readily available finance on better terms than other business models. Indirect endorsements just by virtue of listing shares on an exchange that is recognised. A sole proprietorship, or ordinary business partnership, cannot usually raise the same amount of capital without additional leverage. To that os a private limited company because paying more tax is a Plate Load Test and why is done... Important advantages of a public limited company potentially, this can raise significant funds if your company, shares transferable... 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