I will focus my attention in the last element which is the shareholder base.
Amongst the organizations of the private sector, we distinguish sole trader, partnership, Joint Stock Company.
PSA Peugeot is a Joint stock company and specifically a Public Limited Company (PLC) ran by directors appointed by the shareholders.
To become a public limited company, PSA Peugeot has followed certain legal requirements. Peugeot is a multinational but formed in France. Therefore, the French legislation was applied. Some requirements:
The name: PSA (Peugeot societe anonyme), in English Peugeot Plc;
The objectives: (increase market shares, keep interest in the market alive….)
The location of the registered office: Paris
The SA after or before the name but in England Plc
The company must be quote on stock exchange
A minimum amount authorized share capital
The separation of identity
Publication of the financial account each year available to all shareholders and to any member of the public including the registrar
Registration with the registrar of companies at Companies House.
The accounts have to be audited. Peugeot has two auditors; Coopers and Lybrand Audit SARL and Contantin Associes.
As a PLC, many opportunities are opened to PSA:
The simple fact that the company has a Limited Liability attracts lot of investors who know the extend of their losses and are encouraged to buy shares in the knowledge that their possessions are not at risk.
Shareholders have limited liability and would like to invest more whereas in partnership organization, shareholders have unlimited liability and are not encouraged to invest in the business.
PSA Peugeot can access to more share finance (can sell shares to the general public): that means that it is able to advertise the sale of shares and sell them to the general public. whereas in a Private limited company it’s not allowed to advertise on stock exchange, the shares can be sold only to family, friends, and associates. This may limit the amount of money they are able to raise.
It's very easy for Peugeot to borrow money from Banks because of its great status which differ it from a LTC or any other company in the sense that it is perceived as bigger and more successful than LTD's.
Overall all the benefits, it is easy for Peugeot to raise money. PSA Peugeot also has some disadvantages. For example, the disclosure of its financial information weakens Peugeot and attracts the competition. Whereas in sole trader or in partnership, it's not required to publish a financial account to all the public.
- Ownership structure at PSA Peugeot (at June 30, 2003).
The inconvenient of this structure is that the company founder members don't have enough control of their company as their share is only 26.46% of the total share. Although the founder member has not got enough control of their company, they possess the highest share that allows them to have the majority of decision.
Because of his growth and the success of PSA Peugeot in the market of car manufacturer, more people are interested in buying share to enjoy the dividends. Therefore the company is facing some problems like shares held intreasury, but the last stockholder's meeting authorize the managing board to cancel all shares held unfairly. Peugeot is likely to become soon the leader in the market with its management style. But, it has to avoid some obstacles such as the danger of going public which could become more and more expensive for it and the large growth, which could lead to inefficiency and wastefulness due to lack of control.
