Users' questions 

Why change from a private limited company to a public limited company?

Leia Doyle

Why change from a private limited company to a public limited company?

The main advantage of forming a public limited company is the ability to list company shares on the Stock Exchange. This allows the company to raise capital by selling shares to the public. It also enables existing shareholders to buy and sell shares easily.

What is a disadvantage of a public limited company?

there are more complex accounting and reporting requirements. there is a greater risk of a hostile takeover by a rival company as the company cannot control who buys its shares. shareholders will expect to receive a percentage of the profits as dividends. shareholders may clash when making decisions about the business.

What are the negative impacts of becoming a private limited company?

One of the main disadvantages of a Private Limited Company is that it restricts the transfer ability of shares by its articles. In a Private Limited Company the number of shareholders in any case cannot exceed 50. Another disadvantage of Private Limited Company is that it cannot issue prospectus to public.

What are the strengths and weaknesses of public limited company?

Advantages and disadvantages of a public limited company

  • 1 Raising capital through public issue of shares.
  • 2 Widening the shareholder base and spreading risk.
  • 3 Other finance opportunities.
  • 4 Growth and expansion opportunities.
  • 5 Prestigious profile and confidence.
  • 6 Transferability of shares.
  • 7 Exit Strategy.

What are the benefits of a private limited company?

Besides, limited liability and minimal statutory compliances, pvt ltd companies offer the following advantages:

  • Separate Legal Entity.
  • Uninterrupted existence.
  • Limited Liability.
  • Free & Easy transferability of shares.
  • Owning Property.
  • Capacity to sue and be sued.
  • Dual Relationship.
  • Borrowing Capacity.

    Why is it good to be a public limited company?

    The main advantages of a being public limited company are: Better access to capital – i.e. raising share capital from existing and new investors. Liquidity – shareholders are able to buy and sell their shares (if they are quoted on a stock exchange. To give a company a more prestigious profile.