• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

What are the implications for a Ltd that is thinking of going 'Public'?

Extracts from this document...

Introduction

What are the implications for a Ltd that is thinking of going 'Public'? Incorporated business units are divided into public limited companies (PLC) and private limited companies. They share similarities but differ in a number of ways. Due to numerous reasons many private limited companies have been made into PLC's, like Quice Food Ltd and World Call Ltd. PLC's have limited liability like most private limited companies. This means that the shareholders are only liable for the full amount of the share capital they invested, and a shareholder who has fully paid up his share will not be called upon to settle the debts of the company. A PLC is a separate legal entity from its shareholders; it can have a more permanent existence. ...read more.

Middle

Engro Chemicals bought the shares of their archrivals, Dawood Hercules Fertilisers and gained control over the company. A PLC can invite members of the public to subscribe to shares that are freely transferable and can be brought through the stock exchange. This leads to increasing the capital of the business, and this money can be used to expand the business, introduce new products, market the goods and services in a better way, for market research, new technology, increasing the wages of the management and hiring specialised workers. By tapping the resources of the shareholders it is easier for a PLC to obtain loans from banks. With more capital the firm can produce on a large scale and enjoy economies of scale, like employing specialists and buying in bulk at good trade discounts. ...read more.

Conclusion

The directors may aim towards long-term goals and the shareholders towards short-term goals, this causes friction and can be highly damaging for the business. As the company is very large in size, many problems will start to occur. The owners are far removed from the customers and the personal touch may be lost. The business gets no feedback on how the product is doing in the market, but here the capital may be used on market research, to get feedback. There is a loss of overall ownership and control of the business. Decision-making will take time and there may be disagreements as well. The company's tax burden is also heavier as it is subject to a flat rate of 33% of the company's profits. All of the above mentioned factors should be kept in mind before the conversion of a private limited company into a public one. Amna Qayyum AI ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Structures, Objectives & External Influences section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Structures, Objectives & External Influences essays

  1. Marked by a teacher

    ASDA's Ownership

    4 star(s)

    * Increase into how much children spend These are the main factors that have recently affected ASDA and Wines Plus. They aim to keep customers and they must keep up to date with the latest in developing trends. They must look at the key factors and recognise what has been

  2. For my portfolio, I was asked to do an assignment on two businesses. I ...

    Tesco wants their suppliers to deliver the raw materials in time so they can produce good services to the customers so Tesco choose their location nearness to their customers and they want their raw materials such as flour need to produce for the bread in time.

  1. Introduction to J Sainsbury plc

    & Dransfield, R. Advanced Business. Heinemann Educational Publishers. 2000) How Marketing and Sales help to achieve Sainsbury's Objectives The marketing and sales function at Sainsbury's have aimed to achieve its mission statement, by being the consumer's first choice for food on delivering high-quality products and providing a great service at a competitive cost through working

  2. Free essay

    Market Research

    SMART stand for: Specific, Measurable, Agreed or Achievable, Realistic and Time. I will also organize my objectives in the number of priority. 1. SPECFIC: To survive MEASURABLE: to break even within 2 years of starting up AGREED/ACHIEVEABLE: As I mentioned in my business ideas I believe that in the correct location my business can generate a lot of profit.

  1. The Legal Eagles

    In a small business the owner must do most jobs themselves. 2.2 PARTNERSHIP According to the law, a partnership is "the relationship which exists between one or more persons carrying on business in common with a view to profit". A partnership can exist through verbal or written agreement, or by implication.

  2. Investigating Business. Tesco PLC. I will be describing the aims and objectives of ...

    will value Tesco?s highly for how they care for the safety of their customers. Tesco?s also identifies certain customer needs providing them with healthier choices in some markets, customers expect basic food safety as a given; If Tesco?s has a reputation for selling safe food in a market where food

  1. Applied Business. Investigating a business Preston Manor High School

    For the sixth formers, PSHE lessons help the student with guidance from their tutors, in the lesson they are guided on the best suited career or jobs for the student. The teachers support the students by helping the students if they have an issue with anything.

  2. Legal influences and their impact on Sainsburys Plc

    Work and Families Act 2006 2. Age Discrimination Act 2006 Work and Families Act 2006 The act has doubled paid maternity and adoption leave. It has gone from 6 months to 52 weeks (a year). It has also seen the introduction of 'keeping in touch' days.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work