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Private and Public Limited Companies

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Introduction

Transfer-Encoding: chunked ´╗┐The next type of business is a company. There are two types of companies. Public and private limited companies. Both types of companies will need the articles of association and the memorandum of association; these are two legal documents. The articles of association must include rules for having shareholder meetings, list of directors, and their job. It also should include details of how accounts will be recorded and lastly voting rights of shareholders. The memorandum of association must include the company?s name and main business and address. It should state what the purpose of the business is and statement of limited liability. Lastly it should state the number of shares that can be sold to the public, if a public limited company, or friends and family if a private limited company. ...read more.

Middle

Furthermore, a private limited company is a bigger firm which are likely to employ specialists which means they will get the best quality work done. And lastly, illness and holiday days won?t affect the running of the company because there are other people to take over. However, they cannot sell shares on the stock market (London stock exchange) which means they won?t get as much money and recognition for their company. Furthermore accounts can be seen by everyone, allowing the competition to see precisely how much profit or loss the firm is experiencing. In addition, running a private limited company is more expensive, because for instance they have to pay dividends. ...read more.

Conclusion

This is good because they can get more recognition and can gain more cash. Additionally, if they are running low on cash they can sell more shares to resolve the issues. Disadvantages of a public limited company that are different to private limited companies are that the firm can be taken over. This can be done when a shareholder buys more than 50% of shares making them own more of the company. Also they can be very complex to set up. This is because they must hire services such as an investment bank and a lawyer. These costs can be very high and it may be hard to gain the finance to buy these services. Lastly, public companies have lack of control as they are generally controlled by a board of directors. Therefore those who control the business do not own it. ...read more.

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