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