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Advantages of Public Limited Company 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. Enjoy economies of scale. This is because a PLC can take money from the public. For PLCs, the minimum financial commitment that has to be made is higher as compared to that os a private limited company. Some of the distinctive features of a public limited company are: The public limited company is preferred as it has a separate legal entity under the Companies Act, 2013. Public companies have the advantage of limited liability as well, which comes in handy in the event of bankruptcy or a lawsuit. The more brand recognition a company has, the more business it will have. Advantages of Public Limited Company (PLC) Public limited companies have contributed a lot to economic growth and development in a country. 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. On the other hand, a large base of investors eliminates the need to rely on one or two angel investors unlike many private companies choose to do. Advantages of a limited company. There are advantages to being a public company. Pursue new markets, products and projects. Below, we discuss each one in turn. It helps managers design the relevant marketing strategies for each stages of the … Public record of your finances and filing history: UK company … This puts PLCs at a better position to: Organically grow to profitable heights. The advantages of Public Limited Company might stimulate you to start one, but all that glitters is not gold. A public company, publicly traded company, publicly held company, publicly listed company, or public limited company is a company whose ownership is organized via shares of stock which are intended to be freely traded on a stock exchange or in over-the-counter markets. You can get input from investors. Such form of business has a wide legal capacity to … By law, a public company has a responsibility to its shareholders to maximize shareholder profits and disclose information about business operations. Public Limited Company (Advantages and Disadvantages) Article shared by: ADVERTISEMENTS: Advantages of PLC: PLC is a valuable concept in marketing. How the public view the company will definitely influence the behaviour of employees, suppliers and most importantly, the customers. The business can raise a lot of capital because there is no limit for shareholders to invest. Banks and other financial institutions are more willing to extend financing to this type of company than to smaller forms of business entities. There are many advantages of a limited company, including financial security, only being taxed on profits, the ability to claim back costs from running a business from your home etc. To set up as a PLC you need to have at least two shareholders and at least £50,000 worth of shares must be issued, although there’s no obligation for you to offer any further shares to the public. In some cases, these angel investors invest obscene amounts of expertise and capital to business thus have a tremendous influence over the private company and may choose to steer the company in a direction that that favours them. Shares are transferable, so investors can split profits. Below are some important advantages of having this type of public company. This puts a lot of emphasis on the share price that causes directors to just focus on delivering short-term results thus missing out on making some strategic long term opportunities or fail to recognise threats. The need for a proper evaluation of the advantages and disadvantages is the reason why this article will centre its approach on them to shed some more light to any party that is interested in converting to a PLC. The content on this site is provided for informational purposes only and is not legal or professional advice. However, there are a number of other limited company advantages available. Company can be taken over if a majority of shareholders agree to bid. There is need for having at least two directors. 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. Advantages of Public Limited Company A public limited company is a form of business organization that operates as a separate legal entity from its owners. It is generally easy to transfer shares in a PLC than in private companies, which gives shareholders a chance to benefit from liquidity especially if there is a quote of the shares in the stock exchange. 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. Apart from the initial commitment, other associated costs especially in the formative stages are significantly higher especially when the company has complex requirements plus the need to pay investment and legal professionals to advise and manage the process of getting listed on the stock exchange. Increased growth and expansion opportunities. Make capital expenditure to not only support but also enhance its operations. It is more challenging to vet who chooses to buy into a PLC and to understand who the directors are accountable to. 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. Many private limited companies are particular on the people then admit as shareholders to their companies, while ensuring that their plans and visions are in line with those of the company. The different benefits of a PLC are explained one by one in detail below: High Credibility: The investors find the public limited company to be more reliable and trustworthy, … The advantages of a 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. All lending decisions are determined by the lender and we do not guarantee approval, rates or terms for any lender or loan program. These are just but a few of the advantages and disadvantages of PLCs. This in turn allows the company to be more liquid, invest more capital in improvements, research, and development, and gives the company a more prestigious profile. The name of the public limited company must end with the word “Limited.” A public limited company has no restrictions on the maximum limit of shareholders it can have. A public limited company can easily obtain financing to bankroll its operations. Under a PLC, losses suffered by the investors will be limited to the amount that they have invested in the company. A public company can be listed on a stock exchange (listed company… The concept emphasizes on competitive dynamics. Users are encouraged to use their best judgment in evaluating any third party services or advertisers on this site before submitting any information to any third party. As the name suggests the Public limited company means a company in which the public is substantially interested. The Limited Liability Limited Partnership (LLLP), 4 Disadvantages to Limited Liability Companies. How Does a Family Limited Partnership Work? If you believe your company is well established and has the financial backing, growth potential, legal know-how and directional strength to introduce public figures into asset ownership, then the advantages of a public limited company can result in greatly improved prospects and set you up for new development … However, this statement is not always true as a Public limited company which is not Listed and does not call public for share subscription can be a Public company with Public placement. A public limited company facilitates the growth of a healthy capital market primary and secondary markets for securities have developed largely due to the shares and debentures issued by public companies. Other forms of investments like mutual funds or hedge funds could also be a possibility for PLCs that have stock listed on a recognised exchange. 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. The working of the Public Company is subject to more strict compliances of the provision of the Companies Act 2013. Public Limited Companies have several advantages and disadvantages; Advantages. The biggest advantage of forming a public limited company (PLC) is that it grants the ability to raise capital by issuing public shares. Just by the fact that a company has the suffix PLC at the end of its name already gives it some level of prestige. 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