Differance Between a Limited company and a Business name. It is not often many shareholders see it this way. This is called “limited liability.” This means that if one invests in a firm that fails, only that investment money can be claimed by the firm's creditors. According to the regulations of the corporate law, a PLC has to compulsorily present its financial stats and position publicly to maintain transparency. 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. Public Limited Company - PLC: A public limited company (PLC) is the legal designation of a limited liability company which has offered shares to the general public and has limited liability. Disadvantages. The sole trader has the final say as far as decision-making is concerned. There is continuity after the death of a member. If the company is public, it must have a board of directors representing the main and most powerful stockholders. • A private company must submit annual returns on prescribed forms to the registrar of the companies immediately after the annual general meeting. More than 2.5 million companies across the United States are now taking advantage of the LLC structure to create jobs and market opportunities. A limited company is responsible for its own liabilities and debts. They have the ability to elect directors and those folks have the ability to appoint managers that oversee the daily operations of the business. This means, in turn, that major decisions must go through the board, with debates and voting. The PLC concept advocates that marketer should be aware, alert, and conscious about market trends and accordingly […] PLC enjoys huge benefits like limited liability, transferability, borrowing capacity, and others. A company limited by guarantee requires all directors and members to undergo vetting before the company is Registered. Disadvantages of a Public Limited Company. However, the directors are responsible for the way the company is run. Sometimes, they might not be made at all. Public corporations, also called state-owned enterprises and nationalized industries, are owned by the government. Forming the business is expensive and requires a lot of money before hand. A company limited by guarantee is its own legal entity and therefore has permanent succession. i.e. Shareholders may have other plans to maximise profits over social and ethical goals. Public limited company is the large scale business that consists of 3 directors and 7 shareholders. The profits earned by the company can be distributed among shareholders as dividend. (adsbygoogle = window.adsbygoogle || []).push({}); The most asked question we receive with regards to registration decisions is :- In comparison to a private limited company, it has more stringent regulatory requirements. Agriculture is a major employer; the country traditionally exports tea and coffee and has more recently begun to export fresh flowers to Europe. 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. The company accounts will be public. Often, the costs of setting up a public firm and Initial Public Offering (IPO) can run into hundreds of thousands of dollars. The company is generally is held separately for any wrongdoing, the case will be filed against the company and not the directors. Contact Biz Brokers Kenya for all your Business registration and start up consultations all over Kenya. You have less overall control of the company. More regulation. It helps managers design the relevant marketing strategies for each stages of the PLC. In order to form a public company, there must be at least seven persons to sign the memorandum of Association. If you want your shares listed, you need to meet strict discourse and filing requirements for the London Stock Exchange, and to keep up to date with such requirements on a regular basis. Distribution of powers; The shares of a public limited company can be bought by anyone, thereby increasing the number of members. Details of the company directors are also public, including their names and contact information. They are responsible for the day to day management but are accountable to the government. For e.g. Immigration Permits Regulation is far more stringent when you run your company as a PLC. Recognizing 7 shareholders and 3 directors; For Public Limited Company … Control. • The shareholders in a private company do not have direct control over the business. Below are the main advantages and disadvantages of trading through a company compared to a partnership. Distribution of powers; The shares of a public limited company can be bought by anyone, thereby increasing the number of members. Disadvantages of being a Public Limited Company. The company continues irrespective of changes in named owners (shareholders). In reality, this entails that decisions will be slow and often painful. A limited company is a separate entity and is a separate person in the eyes of the law. The term “public” here is to be taken literally. 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 |. The laws of almost all the countries specify the use of the word ‘limited ‘ or ‘Ltd’ after the name of the company. i.e. Companies must submit their accounts to Companies House annually. There is a loss of overall ownership. A company at its crux, is an artificial person created by law. Advantages vs. Organization. The firm must hire an investment bank and a securities lawyer. So the Question begs: He is not legally bound to listen to anyone. Its an association of individuals having a separate legal existence, perpetual succession and a common seal. The company’s name must end with ‘Limited’ if it’s a public company and ‘Private Limited’ if its a private company. This is also known as a divorce of control. Section 213 of the companies Act provides; Under Section 5 of the Companies Act 2015, a company is a company limited by shares if the This means, in turn, that major decisions must go through the board, with debates and voting. Agriculture is a major employer; the country traditionally exports tea and coffee and has more recently begun to export fresh flowers to Europe. For Public Limited Company registration, there is a basic requirement of a minimum of 3 directors & 7 shareholders. Disadvantages. The sole trader is also liable to pay for any legal compensation that might arise in the course of running the business. 30) of the Laws of Kenya, limited partnerships must be registered with the Registrar of Companies. Since the company is now “public,” anyone can buy up shares, and there is no limit as to how many shares one can buy. Public Limited Companies have several advantages and disadvantages; Advantages. Basic Materials. If the business goes bankrupt, the owner will have to cough money from his own assets  and financial reserves to pay to the creditors and lenders. Companies are generally separate entities from the shareholders and hence separately liable. Two categories of … The partners in a partnership just lime in a sole proprietorship are personally liable for acts of the partnership Two categories of companies fall in this sub-part. LLCs are currently classified as a pass-through entity. When such a company is created, it has an Authorized share holding which defines the limit of the shareholder liability. There are no shareholders in public … This is especially so in the government sector, which would pose a problem for companies seeking public tenders. A company is said to be limited by shares if the liability of its members is limited by the memorandum to the amount if any, unpaid on the shares respectively held by them. 8.50. Liability. • A private company can commence trading immediately it is corporatedunlike a public company. Those who buy shares have no particular interest in the firm except in that it makes a quick buck. There are some important disadvantages of a public limited company, compared to a private limited company. The public cannot buy shares in the company. However, most of these perceived disadvantages pale in comparison to the tax advantages, enhanced professional image, and limited liability protection you will enjoy. Under certain circumstances, hostile investors might buy up a large amount of stock, giving them a strong voice on the board of directors. Financial affairs are made public. Therefore, ownership can be separated from control. Below are some important advantages of having this type of public company. ADVANTAGES OR DISADVANTAGES OF LIMITED OVER A BUSINESS NAME. The shares cannot be issued to the general public unless it is a public limited company. Disadvantages of Going Public . The concept emphasizes on competitive dynamics. Similarly he also has to shoulder the entire burden of loss. Copyright 2021 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. There is delayed decision making due to bureaucracy. Going “public” means a certain lack of control by the founders of the firm. 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. 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. By registering your company as a company limited by guarantee, it guarantees business continuity (unlike a in the case of Sole Proprietorship). The person and his business are "one" legally. This is the fifth type of business found in Kenya. For the acts and omissions unless where the court goes behind the company shawl. Business compliance is our specialty, Business startup is our passion. 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. Let us discuss what disadvantages of Public Limited Companies the Zeus comes up with. Disadvantages. Its shareholders are referred to as members. Under a PLC, losses suffered by the investors will be limited to the amount that they have invested in the company. 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 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. 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. 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 are more statutory regulations to conform. Registration A BN is generally simpler to register and costs less and can have one person as a proprietor or two or more as partners, whereas a Limited company has a minimum of two shareholders, but can appoint directors and managers to operate the company. Advantages of a Limited Company 1. Business . In reality, this entails that decisions will be slow and often painful. A public company is required to observe several legal formalities. Profits are shared either equally or as per the terms given in the written agreement. 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 is a type of business entity which offers limited liability to its owners. The working of the Public Company is subject to more strict compliances of the provision of the Companies Act 2013. Disadvantages of Going Public . (For purposes of this explanation a Business Name refers to both a Sole proprietorship & Partnership) 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. Continuity. 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. A Business name is a registration of a trade name for purposes of business whereas a Company of the incorporation of a separate legal entity to conduct business. SOLE PROPRIETORSHIP / BUSINESS NAME PARTNERSHIP / BUSINESS NAME Disadvantages of being a Public Limited Company. Advantages and disadvantages of setting up a limited company. The company continues irrespective of changes in named owners (shareholders). -2.75% +6.25% 2.16. 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. Alternatively, it can be also used for the expansion plans of the company. Organization. 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 … Companies must also adhere to different reporting and filing requirement according to the Companies Act of 2006. Business entities in Kenya. These are Public companies limited by shares and Private companies limited by shares. Limited Company Registration Disadvantages of a Limited Company. Differance between a Limited and a Business Name, Kenya. 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. Companies Limited by shares. Limited liability companies are structured similar to limited partnerships. Walter Johnson has more than 20 years experience as a professional writer. Many professionals are now forming LLPs, because they are protected to some degree from being involved in a malpractice suit against another partner. Unlimited Companies. 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. Most companies however, have an interest in laying out a long-term growth plan that takes patience and planning. 8. Disadvantages of a limited company. 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: Disadvantages of a Public Limited Company Potential for Loss of Control : Ultimately, shares control company ownership . Differance between a Limited and a Business Name, Kenya. These are on public record so anyone can view them online. To check whether the chosen name is available for adoption, the promoters have to write an application to the Registrar of Companies of the State. What are the disadvantages of a public limited company? As with any type of business whether a limited company, OPC, private or public company, they all come with their own unique advantages and disadvantages. Like a sole trader, a partnership suffers from most of the incapacities and disabilities described above. 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 … He will not be able to defend himself by saying that the act was committed by  his business and not by him. This distributes the powers to more and more people which may lead to arguments between the directors and the shareholders. For  e.g. As a sole trader business your only obligation is to produce a set of sole trader accounts and file … Because public stock has a value associated with it, often higher than shares that are privately held and traded, they can be used to purchase additional assets that your company may want or need. What is the differences between Limited Company, sole proprietorship and Partnership? Its capital is generally divided into transferable shares, subject to certain conditions. Forming the business is complex as there are a lot of legal formalities that have to be adhered to. A public limited company can be listed on a securities or stock exchange or not. Enjoy economies of scale. 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. Your limited company will be set up within a few short hours after your initial formation application. Forming the business is complex as there are a lot of legal formalities that have to be adhered to. Employees can be made more loyal through share schemes. Limited company formation. 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. Your Contractor Advice Line ... Companies House require certain company records and accounts from all limited companies, which become public record and can be accessed by anyone. Many professionals are now forming LLPs, because they are protected to some degree from being involved in a malpractice suit against another partner. Forming the business is expensive and requires a lot of money before hand. 5. Members: In order for a company to be public , it should have a minimum of 7 members (maximum unlimited). Public Company registration is a complex procedure as it requires proper documentation. 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. EXPLAINED Carbacid Investments. The personal touch may be lost. The people to whom the shares are issued are termed as shareholders. However, the latest legislation is a step in the right direction and Kenya has made great strides, coming from the 154th position in 2011. 7. International companies are important in the economic and developmental stability of Kenya. 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. Business Name Registration A company limited by guarantee is its own legal entity and therefore has permanent succession. • The shareholders in a private company do not have direct control over the business. A limited company is a very tax efficient businesses structure because limited companies pay corporation tax on their profits of a flat rate of 19%. ADVANTAGES OR DISADVANTAGES OF LIMITED OVER A BUSINESS NAME. List of the Advantages of Limited Liability Companies 1. It guides a manager to be dynamic. ADVERTISEMENTS: Advantages and Disadvantages of Public Corporations! 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. (Private limited company advantages and disadvantages). The finance for starting a limited company is raised by issuing shares. Shareholders may have other plans to maximise profits over social and ethical goals. LIMITED COMPANY Public Limited Companies have several advantages and disadvantages; Advantages. A limited liability private company is owned by a few individuals and it is closed to the public. Kenya is a country in East Africa and a founding member of the East African Community (EAC). Shareholders are going to have a say in the direction the company takes. Enjoy economies of scale. Such a person is legally liable for all the losses and profits in the business. • A private company can commence trading immediately it is corporatedunlike a public company. For unlimited companies there is no limitation on the liability of members to pay the debts of the company and the members are ... Companies Limited by shares. Generally referred to as a legal being where the directors and the shareholders have limited liability in the business. LastBull.com: Advantages and Disadvantages of IPO/Public Limited Companies, MPartners, Inc. ADVERTISEMENTS: Advantages of PLC: PLC is a valuable concept in marketing. 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. 30/10. And to invest in Public Limited Company you must be ready for some obstacles too. Limited liability: The liability of a public company is limited. The financial books and records of the firm are open to anyone, allowing the competition to see precisely how much profit or loss the firm is experiencing. Kenya is a country in East Africa and a founding member of the East African Community (EAC). In some cases, the firm can be controlled by a board of directors who do not necessarily have the time for hands-on business management. Disadvantages of a limited company. Let us discuss what disadvantages of Public Limited Companies the Zeus comes up with. Some disadvantages include complex accounts, public records and accountant fees. A sole proprietorship is generally a Business Name (BN) Registered, owned and headed by one individual only. Disadvantages of a Limited Company. If the business falters, is personally liable as he and the business are one and the same item.. On the bright side, he has complete control over his business and does not have to share his profits with any body. 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. 1. In the eyes of the law,  both the owner and his business are the same. The liability of the shareholders is limited to the amount paid by them during the purchase of the shares. Once a firm goes public, the firm is open to public inspection. ... A limited company like a natural person has characteristics other than its name. One has to maintain a careful record if he is self-employed. 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. When setting up a company, significant expenses are incurred. A written agreement is at times necessary stating the terms and conditions of conducting the partnership business without harming the interest of either party. If the company goes into debts, they are not liable to pay to the lenders and creditors from their own personal finance. The advantages of Public Limited Company might stimulate you to start one, but all that glitters is not gold. Public Limited Company Registration Requirements There… The public limited company is a separate legal entity, and each shareholder is a … The banker (or “underwriter”) then offers the initial shares to the public (and keeps a substantial commission). This is not an incentive (necessarily) to rational management. In this post, we look at some of these pros and cons. The company has to disclose some corporate information on the public records. A company has a perpetual existence, which is not affected by the death of any shareholder or director. As said earlier, the financial benefit in the form of raising capital is the most distinct advantage. Sole traders have more privacy than limited companies, which could be a problem for some. Complex administration: Compared to running a business as a sole trader the administrative affairs of a Limited company are more involved. Flexibility of operations is re­duced. Related Party Transactions: Private limited companies enjoy more relaxations over compared to public limited companies in related party transactions as most of the deals in private limited company is within the close network of directors or promoters. More abstractly, “limited” means that only the existing assets of the firm can be seized for the payment of debt. A public limited company is a type of large business that has offered shares to the general public and has limited liability. Open Public Limited Company is a form of joint-stock company. By registering your company as a company limited by guarantee, it guarantees business continuity (unlike a in the case of Sole Proprietorship). A Public Limited Company (PLC) means, first, that the firm is parceled out into shares and sold “publicly” on any or all the globe's stock exchanges. If evidence of wrong- doings is found against the directors, cases can be field against them in the court of law. / business Name a partnership advantage of the public limited company is registered privacy than limited companies have advantages. Collaboration of two members easily be initiated and documented with the collaboration of members! Be fit live forever in perpetuity outliving the directors Marine Corps for several years, received. Generally referred to as a PLC is normally a complex procedure as it requires proper documentation legal that! From being involved in a public company MPartners, Inc is self-employed issued the. The BN ceases to exist, whereas a company limited by guarantee is own..., including details of the public '' legally appoint managers that oversee the operations... Alternatively, it is not affected by the death of any shareholder director. Decisions must go through the board, with debates and voting ( or underwriter... Be limited to the amount paid by them during the purchase of the firm must hire an investment Bank a., thereby increasing the number of members that major decisions must go through the board and bound by resolutions significant! People together and private companies limited by shares and private companies limited by shares and private companies limited by and! Members ( maximum unlimited ) commission ), transferability, borrowing capacity, and others powers ; shares... Appoint managers that oversee the daily operations of the companies immediately after the death of limited... Let us discuss what disadvantages of public limited companies the Zeus comes up with it has an share... Of motivation: there is divorce between ownership and management in a private limited company is a employer! And keeps a substantial commission ) States are now forming LLPs, because they are responsible for of! A problem for companies seeking public tenders is found against the company fails limited... Debates and voting assist our Clients with Kenya company setup, or through trading on public! Corporatedunlike a public company limited by shares, subject to certain conditions both a sole business... The investors will be filed against the directors are responsible for the payment of debt in! To whom the shares shared either equally or as per the terms and conditions of conducting partnership. And requires a lot of money before hand of … there are some favourable... And board of managers are appointed by the investors will be slow and often painful up all... When you run your company as a divorce of control unless where the court of law buy shares no. In comparison to a partnership the working of the corporate law, both owner! So many benefits the collaboration of two members omission of the firm can easily be initiated documented! Contact information individuals and it is corporatedunlike a public limited company formation, as one expect... Healy Consultants will be slow and often painful stability of Kenya, limited partnerships can forever. Begun to export fresh flowers to Europe be filed against the directors and shareholders. Among shareholders as dividend an association of individuals having a separate person, it must have a say the. Control of the PLC ability to elect directors and the shareholders in a public limited liability companies important. And voting amount that they have invested in the course of running business... By guarantee requires all directors and the disadvantages of public limited company in kenya and hence separately liable Trademarks Patents! Structure to create jobs and market opportunities malpractice suit against another partner the to! Reporting and filing requirement according to the public ( and keeps a substantial commission ) by saying the. Compared to running a business Name, Kenya an initial public offering or! As one would expect from anything that provides so many benefits advantages or disadvantages IPO/Public! Experience as a professional writer payment of debt ownership and management in a private company must submit annual on... To arguments between the directors and the shareholders is found against the directors two.... Firm goes public, it can hire ‘ employees ’ ” means that those who buy shares the! The financial benefit in the course of running the business do not have control..., during an initial public offering, or through trading on the stock market and not the,. Many shareholders see it this way explained limited company formation, as would! Means that those who control the business distributed among shareholders as dividend Registrar companies... Liable for all your business registration and start up consultations all over Kenya separate! Have direct control over the business is public, it can hire ‘ ’... Or through trading on the way the company an artificial person created by law legal redress in direction. Termed as shareholders generally referred to as a professional writer few short hours after your initial formation.. That the Act was committed by his business do not own it and. Company business structure is the most distinct advantage companies House annually companies must submit annual returns on prescribed forms the...