LEGAL STRUCTURE
THE RIGHT LEGAL STRUCTURE
Learning outcomes
All Can define a Private and Public limited company
Most Can analyse the advantages and disadvantages
Some Can relate to a real life example
RECAPWhat is a sole trader?What is a partnership?What is unlimited liability?What is limited liability?
PRIVATE LIMITED COMPANY
A business that offers investors a share in the business
Shares can only be sold to family and friends
Has Ltd after the name
Examples: Virgin, Toy Manufacturers, Family firms
ADVANTAGES/ DISADVANTAGESADV DIS
Reputation
Attracts private investors
More capital
Owners remain directors
Limited liability
Cannot be listed on the stock exchange
No share prices so shareholders are unaware of their worth
Legal requirements for registration
PUBLIC LIMITED COMPANY A company able to sell shares to the
general public by being listed on the stock exchange
Has PLC after the name
ADVANTAGES/ DISADVANTAGES
ADV DIS
Limited liability
Can raise lots of capital
Unlimited number of shareholders
Complicated/time consuming legal formalities
Conflict between shareholders and directors
Have to pay dividends
Loss of control
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