Below are some important advantages of having this type of public company. In the case of a company limited by shares a member will be liable only for the amount payable on his shares if the company is limited by guarantee, then the liability is limited to the amount quarantined to be paid. • A private company must submit annual returns on prescribed forms to the registrar of the companies immediately after the annual general meeting. List of the Advantages of Limited Liability Companies 1. Companies Limited by shares. Recognizing 7 shareholders and 3 directors; For Public Limited Company … • The shareholders in a private company do not have direct control over the business. Section 43-A sub-section (1) provides that a private company would be deemed to be a public company where twenty-five percent or more of its paid-up share capital (whether preference or equity) is held by one or more public companies or private companies which had become public companies by virtue of Sec. This means, in turn, that major decisions must go through the board, with debates and voting. Since the company is now “public,” anyone can buy up shares, and there is no limit as to how many shares one can buy. However, the latest legislation is a step in the right direction and Kenya has made great strides, coming from the 154th position in 2011. If evidence of wrong- doings is found against the directors, cases can be field against them in the court of law. For the past two decades, international companies have greatly helped and partnered with local firms and organizations in addressing national challenges that are not limited to food security, health, hygiene, and water in marginalized areas. Meanwhile many companies limited by shares are formed as private companies, you may get to know through this article about the advantages and disadvantages of a public limited company. Agriculture is a major employer; the country traditionally exports tea and coffee and has more recently begun to export fresh flowers to Europe. These limited liability company advantages and disadvantages may help you be able to determine if an LLC structure is the right one for your business. 7. Two categories of companies fall in this sub-part. A private limited liability company is only permitted to have a maximum of 50 members (excluding those under the company’s employment). By registering your company as a company limited by guarantee, it guarantees business continuity (unlike a in the case of Sole Proprietorship). This is not an incentive (necessarily) to rational management. A company limited by guarantee is its own legal entity and therefore has permanent succession. EXPLAINED Continuity. The company has more borrowing capacity. ADVERTISEMENTS: Advantages of PLC: PLC is a valuable concept in marketing. While most companies limited by shares are set up as private companies, in this article we look at the advantages and disadvantages of a public limited company. ... A limited company like a natural person has characteristics other than its name. Control. Financial affairs are made public. More regulation. Tax benefits of a limited company. The company has to disclose some corporate information on the public records. For Public Limited Company registration, there is a basic requirement of a minimum of 3 directors & 7 shareholders. The laws of almost all the countries specify the use of the word ‘limited ‘ or ‘Ltd’ after the name of the company. The private limited firm can easily be initiated and documented with the collaboration of two members. Business Name Registration The Initial Public Offering (IPO) Process. Its shareholders are referred to as members. (For purposes of this explanation a Business Name refers to both a Sole proprietorship & Partnership) Financial affairs are made public. In BN's the proprietor is personally liable for act and omission of the registration. Home | About us | Our Services | Business Opportunities | Business for Sale | Trade Mark | Company Registration | Add Link | Business Name Registration | Download Registration Forms | Contact Us | Reference | Links | Privacy | Registration FAQ's | Terms & Conditions |. Limited Company Advantages and Disadvantages. A sole entity might come to an end if the owner becomes bankrupt or has an untimely demise, with no one to look after the business. The people to whom the shares are issued are termed as shareholders. The advantages of Public Limited Company might stimulate you to start one, but all that glitters is not gold. Sometimes, they might not be made at all. Disadvantages of a Limited Company. One requirement under the Companies Act that when the membership of a private company exceeds fifty, it must convert to a public company.The right to transfer shares is restricted and shares or debentures cannot be subscribed to the public. The PLC concept advocates that marketer should be aware, alert, and conscious about market trends and accordingly […] The law does not make any distinction between the owner and his business. A great number of businesses choose to incorporate as a company limited by shares rather than other forms, such as the sole trader, partnership, limited liability partnership (LLP) or company limited by guarantee.. The sole trader is also liable to pay for any legal compensation that might arise in the course of running the business. For the acts and omissions unless where the court goes behind the company shawl. Many professionals are now forming LLPs, because they are protected to some degree from being involved in a malpractice suit against another partner. Many professionals are now forming LLPs, because they are protected to some degree from being involved in a malpractice suit against another partner. In a partnership, the proprietor /s have full control of the affairs of the BN, in a Company control is via board decisions or as per share holdings held by the shareholders. LIMITED COMPANY Most companies however, have an interest in laying out a long-term growth plan that takes patience and planning. Shares count for votes in PLCs, which means if you sell off more than 50% of your company, there is the potential for shareholders to take … A public company is required to observe several legal formalities. Alternatively, it can be also used for the expansion plans of the company. Distribution of powers; The shares of a public limited company can be bought by anyone, thereby increasing the number of members. As said earlier, the financial benefit in the form of raising capital is the most distinct advantage. A limited company can be set up with a minimum of two shares holders and the limit of their liability is as per the value of shares they own. Two categories of … He may do whatever he deems to be fit. The public cannot buy shares in the company. Reach out to Access Bank customer care service using these contacts. The Proprietor / s are personally responsible for all the affairs pertaining to the business. Sometimes, they might not be made at all. Its capital and largest city is Nairobi.The capital, Nairobi, is a regional commercial hub.The economy of Kenya is the largest by GDP in East and Central Africa. There could be a possible loss of control, as people may find that shareholders own over 50% of the shares, entitling them to the ownership of the business. Its capital and largest city is Nairobi.The capital, Nairobi, is a regional commercial hub.The economy of Kenya is the largest by GDP in East and Central Africa. Business entities in Kenya. 30) of the Laws of Kenya, limited partnerships must be registered with the Registrar of Companies. The term “public” here is to be taken literally. There is continuity after the death of a member. According to the regulations of the corporate law, a PLC has to compulsorily present its financial stats and position publicly to maintain transparency. When a limited company is incorporated, it is considered a separate individual by the law. 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 growth. Most of the advantages and disadvantages of structuring your company as a privately held, limited liability company can be attributed to the company's status as a closely held company. Copyright 2021 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Public Company registration is a complex procedure as it requires proper documentation. These public limited company disadvantages include: 1 More regulatory requirements To help protect shareholders, the legal and regulatory requirements for a public limited company are more onerous than for private limited companies. A public limited company (PLC) is a type of business entity whose shares can be publicly traded via stock exchanges, but whose liability is limited. Public limited company is the large scale business that consists of 3 directors and 7 shareholders. (Private limited company advantages and disadvantages). • The shareholders in a private company do not have direct control over the business. The person and his business are "one" legally. Focused on economic topics, Johnson reads Russian and has published in journals such as “The Salisbury Review,” "The Constantian" and “The Social Justice Review.". 1. Shareholders may have other plans to maximise profits over social and ethical goals. The shares cannot be issued to the general public unless it is a public limited company. These employees can be the directors of the company, the secretary as well as the staff including the receptionist! Immigration Permits Disadvantages of being a Public Limited Company. This is also known as a divorce of control. Disadvantages of Going Public . Liability. These are on public record so anyone can view them online. The Limited Liability Partnership combines some of the features of a traditional partnership, in particular flexibility, with the limited liability benefits more typically associated with a company. It is very much like any major entity in that it is very strictly regulated and such companies are required to publish their financial documents so that shareholders and general stakeholders can see what the financial health of the company … There is delayed decision making due to bureaucracy. • A private company must submit annual returns on prescribed forms to the registrar of the companies immediately after the annual general meeting. Disadvantages of a limited company. This is especially so in the government sector, which would pose a problem for companies seeking public tenders. There is continuity after the death of a member. Our all-inclusive package costs only £125 plus VAT and includes online registration, VAT & PAYE registration, share structure advice, free business banking, a 15% discount on Hiscox business insurance as well as a registered office address. This is the most viable options if the capital is being invested into the business by anyone who does not wish to be involved in running it. Companies must submit their accounts to Companies House annually. The advantages of Public Limited Company might stimulate you to start one, but all that glitters is not gold. Public Limited Companies have several advantages and disadvantages; Advantages. Limited liability public company. It helps managers design the relevant marketing strategies for each stages of the PLC. The chairman and board of managers are appointed by the government. Differance between a Limited and a Business Name, Kenya. A limited liability private company is owned by a few individuals and it is closed to the public. There could be a possible loss of control, as people may find that shareholders own over 50% of the shares, entitling them to the ownership of the business. After serving in the United Stated Marine Corps for several years, he received his doctorate in history from the University of Nebraska. Disadvantages of a limited company. i.e. He keeps the entire profit earned by him. A PLC is normally a complex thing to start. A private limited company hold high credibility in the national and international market. A complete breakdown of limited company advantages and disadvantages. -2.75% +6.25% 2.16. This distributes the powers to more and more people which may lead to arguments between the directors and the shareholders. Open Public Limited Company is a form of joint-stock company. A Public Limited Company is a type of business entity which offers limited liability to its owners. Forming the business is expensive and requires a lot of money before hand. However, the directors are responsible for the way the company is run. Let us discuss what disadvantages of Public Limited Companies the Zeus comes up with. In this case, a firm that was built up by one group (or person) can now be taken over by others since the firm has gone public. They are responsible for the day to day management but are accountable to the government. Healy Consultants will be pleased to assist our Clients with Kenya company setup. Upon death or exit of a proprietor the BN ceases to exist, whereas a company can live forever in perpetuity outliving the directors. We are in the Business of Business. Enjoy economies of scale. Let us discuss what disadvantages of Public Limited Companies the Zeus comes up with. The company continues irrespective of changes in named owners (shareholders). • A private company can commence trading immediately it is corporatedunlike a public company. He will not be able to defend himself by saying that the act was committed by  his business and not by him. 5. Can raise more capital when compared to private limited companies; Have limited liability which means they cannot lose private assets in settlement of company debts. He is not legally bound to listen to anyone. Shareholders are going to have a say in the direction the company takes. As said earlier, the financial benefit in the form of raising capital is the most distinct advantage. Flexibility of operations is re­duced. The following are advantages and disadvantage of trading through a company compared to trading through a sole proprietorship business. Lack of motivation: There is divorce between ownership and management in a public company. A public limited company can be listed on a securities or stock exchange or not. Companies must also adhere to different reporting and filing requirement according to the Companies Act of 2006. Disadvantages of a Limited Company. In reality, this entails that decisions will be slow and often painful. And to invest in Public Limited Company you must be ready for some obstacles too. Those who buy shares have no particular interest in the firm except in that it makes a quick buck. The liability of the shareholders is limited to the amount paid by them during the purchase of the shares. The advantages include tax efficiency, separate entity and professional status. Disadvantage 2 of a Limited Company: Administration Costs
Accounting costs for a limited company tend to be more expensive (and complicated) than for a Sole Trader.
After a certain level of total revenue, limited companies are required to have their annual accounts audited (which can be expensive). The limited company business structure is the second most popular in the UK. Shareholders may have other plans to maximise profits over social and ethical goals. No shareholder is individually liable for the payment. For e.g. The profits earned by the company can be distributed among shareholders as dividend. The partners in a partnership just lime in a sole proprietorship are personally liable for acts of the partnership As stated by section 2(28) of the companies ordinance 1984 a private Limited company relates to a company which according to its Articles of Association: Unlimited Companies. These are Public companies limited by shares and Private companies limited by shares. These limited liability company advantages and disadvantages may help you be able to determine if an LLC structure is the right one for your business. 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