Limited Companies LTD and PLC What they are and the differences between them

What’s the same? Both have limited liability (personal possessions not at risk) Both have limited liability (personal possessions not at risk) Both have shareholders Both have shareholders Both are set up in the same way Both are set up in the same way Both pay dividends to shareholders (share of the profits) Both pay dividends to shareholders (share of the profits) Both have votes to decide what happens in the company Both have votes to decide what happens in the company Both have a board of directors Both have a board of directors

Private Limited Companies LTD You must know all of the shareholders involved You must know all of the shareholders involved Usually made up of 2-50 shareholders Usually made up of 2-50 shareholders Done for smaller businesses with less finance involved Done for smaller businesses with less finance involved

Shares issued as a method of raising capital Separate legal identity from owners Business can continue even if one of the shareholders wants to sell shares Is not affected by the death of a shareholder No set number of directors, usually the less directors, the easier it is to control Financial information is available for anyone to see Can be costly and time consuming to set up and register Shares can only be sold to people who are known to the company Hard to raise extra capital A Dividend has to be given to the shareholders each year if the company makes a profit

Public Limited Companies PLC Much larger organisations Much larger organisations Shares sold to the general public on the stock exchange Shares sold to the general public on the stock exchange Has to have sold more than £50,000 worth of shares Has to have sold more than £50,000 worth of shares Can have majority shareholders (if you own 51% or more of the company you will have the final say in how it is ran) Can have majority shareholders (if you own 51% or more of the company you will have the final say in how it is ran) Share prices subject to change depending on what is happening in the economy in general Share prices subject to change depending on what is happening in the economy in general

Can raise large sums of finance by selling shares Easy to raise extra finance in a short space of time Expensive with lots of paperwork to set up Financial information is available for the general public to see Dividends have to be paid to shareholders each year as a share of the profits Risk of takeover as anyone can buy shares on the stock exchange, if 51% is purchased the control of the company will go to the new majority shareholder Shareholders with a few number of shares will have very little say in how the business is ran