Business ownership - OCRPublic Limited Company (Plc)

Larger businesses may choose to become a public limited company (Plc). In a Plc, shares are sold to the public on the stock market. People who own shares are called ‘shareholders’. They become part owners of the business and have a voice in how it operates. A chief executive officer (CEO) and board of directors manage and oversee the business’ activities.

When a business sells shares on a stock market, this is known as ‘floating on the stock exchange’.

Advantages of being a Plc include:

• the business has the ability to raise additional finance through share capital
• the shareholders have limited liability
• there are increased negotiation opportunities with suppliers in terms of prices because larger businesses can achieve economies of scale

Disadvantages of being a Plc include:

• it is expensive to set up, requiring a minimum of £50,000
• there are more complex accounting and reporting requirements
• there is a greater risk of a hostile takeover by a rival company