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Choosing the right legal structure for the business

Choosing the right legal structure for the business. GCSE Business studies Unit 2 Topic 6. PLC- Public limited company Can sell shares on the stock exchange (aka quoted) Must have share capital of £50,000 Anyone can be a shareholder (competitors). LTD- Private limited company

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Choosing the right legal structure for the business

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  1. Choosing the right legal structure for the business GCSE Business studies Unit 2 Topic 6

  2. PLC- Public limited company Can sell shares on the stock exchange (aka quoted) Must have share capital of £50,000 Anyone can be a shareholder (competitors) LTD- Private limited company Cannot publicly advertise its shares Owners can restrict WHO owns part of their company Family and friends Company Act 1980 Floatation

  3. Advantages • Can advertise shares to general public • Higher number of potential customers • Raise larger sums of money • More media coverage because more shareholders (cheap publicity) • Usually bigger companies and this impresses shareholders • Easier to sell shares so investors willing to buy, possibly sell later

  4. Disadvantages • Media coverage may be bad • Competitor may buy firm • No control over share ownership • More regulations on a PLC compared to a LTD (added expenses) • Competitors may find it easier to find out information about the firm • Mixed views of investors, may conflict with owners

  5. The Story So Far… • In your books • You need to draw the evolution of a sole trader-partnership-company- LTD/PLC Sole trader Company

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