Public limited companies (plc)
As a business grows, it may choose to become a public limited company (PLC). In a PLC, are sold to the public on the . People who own shares are called ‘shareholders’. They become part owners of the business and have a voice in how it operates. A chief executive officer (CEO) and board of directors manage and oversee the business’ activities.
When a business sells shares on a stock market, this is known as ‘floating on the stock exchange’.
Advantages of being a PLC include:
- the business has the ability to raise additional finance through
- the shareholders have
- increased negotiation opportunities with suppliers in terms of prices because larger businesses can achieve
Disadvantages of being a PLC include:
- it is expensive to set up, requiring a minimum set up cost of £50,000
- there are more complex accounting and reporting requirements
- there is a greater risk of a by a rival company as the company cannot control who buys its shares
- shareholders will expect to receive a percentage of the profits as
- shareholders may clash when making decisions about the business
