Advantages and disadvantages of public limited company in india

A public limited company has all the advantages of private limited company and the ability to have any number of members, ease in transfer of shareholding and more transparency. Limited Liability Partnership – New way of Business in India : – Hi Readers, in this Article we will discuss about LLP advantages and disadvantages in India. What are the advantages and disadvantages of public limited companies?

What is a private limited company? Limited liability:Shareholders often find holding shares in companies more attractive than (for example) going into partnership because they have limited or no liability for the debts of the company. By contrast, in a partnership, partners can be both jointly and severally liable for each other’s debts.

Strength in numbers: A company is by definition a group of people working together. Prestige:Once a company’s name gets known among the general public, it starts to carry with it a certain prestige that attracts high calibre employees and shareholders. Ownership can easily be transferred:Some business structures, such as partnerships, make it very hard to change who owns the business.

See full list on importantindia. If you are an owner of a company, you can expect there to be plenty of committees, board meetings, regulatory filings and other administrative tasks taking up your time. Indirect control of shareholders:Shareholders, who are the real owners, have limited control in the day-to-day activities of the company. Double taxation:In many countries, corporations have to pay tax twice on their earnings. First, the corporation pays tax on its profits.

Then, they pay the dividend distribution tax (DDT) on the amount.

A company or corporation is a good example of how working together with others in the business world has many advantages – not least in terms of maximizing profits. However, there are several restrictions involved in being part of a company, and it is good to be aware of these before becoming part of a company. As well as those forming new companies , a proper evaluation of the advantages and disadvantages of a public limited company will be needed for an existing private limited company. So let us see what are some major advantages and disadvantages of incorporating a private limited company.

A company is a legal entity and a juristic person established under the Act. Though public limited company structure of a business enterprise has many distinct advantages and therefore it is most preferred business structure for large business enterprises in India. However there are few disadvantages of opting for this business structure too. Some disadvantages include complex accounts, public records and accountant fees. Secondly, it means that those who invest in the firm are protected from extreme loss if the company fails.

It can be registered with a minimum of two people. Limited liability protection to shareholders, ability to raise equity funds, separate legal entity status make it the most recommended type of business entity for millions of small and medium. Public Limited Company (Plc) Larger businesses may choose to become a public limited company (Plc). While owning a private limited company has several advantages , there are some disadvantages associated with it as well, such as the inability to publicly sell shares and limits on.

Such form of business has a wide legal capacity to own property and incur debts. Not suitable for large businesses. If the paid-up capital of an OPC exceeds Rs.

OPC needs to mandatorily convert into a private limited company. Its liability is limited to the extent of their shares.

Shareholders either can manage the company on their own or hire directors to do the same. What’s more, is that such an entity has minimal compliance requirements and need not conduct an external audit of its books until it has a turnover of Rs. The limit on maximum no. Companies also may struggle if they are unreliable or have seasonal traits, such as a manufacturer of Christmas gifts.

Having Shares will fund expansion, allowing the business to grow. Tax Advantages Private limited companies enjoy tax advantages in addition to limited liability. These companies usually write PLC after their names. Minimum value of shares to be issued (in UK) is £5000.

This also raises company profile. There is limited liability for the shareholders. A company can raise additional capital by issuing more shares or debentures. Greater borrowing power. Both private and public limited companies have it’s own advantages and disadvantages.

An entrepreneur has to choose the type based on his funding plans. Let’s take a look at the key factors of both Private and Public ltd companies. Joint Stock Company – Advantages and Disadvantages Advantages of Joint Stock Company : 1. Thus there is no risk of all the assets of the person being lost because of a single mistake. A private company suffers from the following limitations: 1. Its credit standing is lower than that of a public company.

Therefore, the financial and managerial resources of a private company are comparatively limited.