Shareholders: These are the owners of the company. Their influence is usually proportional to the number of shares they own, and they exercise control primarily by voting on major decisions at Annual General Meetings (AGMs).
Directors: These individuals are appointed by shareholders to manage the day-to-day operations of the business. In small companies, the owners and directors are often the same people.
Divorce of Ownership and Control: In large PLCs, the people who own the company (shareholders) are often entirely different from the people who run it (directors), which can lead to conflicting interests.
| Feature | Private Limited (Ltd) | Public Limited (PLC) |
|---|---|---|
| Share Sales | Private (friends/family) | Public (Stock Exchange) |
| Capital Potential | Limited to private investors | Very high (Public markets) |
| Disclosure | Moderate (Annual accounts) | High (Audited public reports) |
| Control | Usually kept within a small group | Can be diluted by thousands of owners |
Minimum Capital: PLCs often require a significant minimum share capital (e.g., 50,000 GBP) to be issued before they can trade, whereas Ltd companies can often start with very little.
Transferability: Shares in a PLC are highly liquid and can be bought or sold instantly on the market, while shares in an Ltd often require the consent of other directors to be transferred.
Identify the Suffix: Always check if a business is described as 'Ltd' or 'PLC' in a case study, as this dictates their ability to raise finance and their legal obligations.
Liability Logic: If a question asks about risk, emphasize that 'limited' refers to the liability of the owners, not the company itself. The company still has 'unlimited' responsibility for its debts until it runs out of assets.
Capital vs. Control: Remember the trade-off: going public (PLC) provides access to capital but results in a loss of privacy and a potential loss of control for the original founders.
