W and R toilet makes are thinking of expanding by becoming PRIVATE :: Business and Management Studies

W and R toilet makes are thinking of expanding by becoming PRIVATE LIMITED CO (LTD) evaluate this decision. I think that W and R should become a PLC because there are a lot of advantages to them there must be at least two shareholders and there MUST be at least one director while this is good that their only has to at least two people shares cannot just be transferred freely, their must be some kind of agreement with the other shareholders so if you have the majority rule it wont work her as everyone must agree. They are easy to set up they mainly have the flexibility of a sole trader and a partnership but without the risks of unlimited liability. Small private companies if successful can raise capital more easily the liability makes people want to invest in the company more and its easier for it to borrow money as sole traders and partnerships often find this very hard. One of the key advantages is that the business will not come seize if one of the partners (owners) decide to pull out as the owners can choose who they want to sell their products to (shareholders). But there are a few disadvantages but compared to a sole partnership or trader much less, people might be unwilling to buy shares, there is more control over how the business is run and it can sometimes be very hard for shareholders to get their money back when they want but its much less risky. Ed wood ltd needs to raise a very large amount of capital to build a new factory. It is thinking of becoming a PLC. Analyze this decision. Public companies must start out with at least 50,000 pounds there must be at least 7 shareholders but only 2 are needed to sign a Memorandum of Association and shares are sold to the public. Anyone can come and inspect the shares, but at the same time shareholders who want their money back can simply just sell their shares back to the stock market. This makes people more willing to invest, large amounts of capital can be gathered from just one organization large companies can be formed but there is also a lot of competition. Nevertheless you are also able to benefit from other companies from and from their economies of sale. Banks are also willing to give loans to companies who have a large share capital. Shareholders might not have very much power of have very little influence and public companies are controlled by the law but in a public company you can check up on your stock and the