10 Disadvantages of a public limited company

A public limited company is a corporate association of at least two persons which is registered with the registrar of companies and owned by shareholders who have limited liability




The word public means that the general public are welcome to buy shares in the company

The word limited means:

  • The liability of the company is limited to its total resources
  • The liabilities/ debts of shareholders are confined to the amount of capital they have invested/put in or agreed to pay in limited company

DISADVANTAGES OF PUBLIC LIMITED LIABILITY




  • There are more formalities in running a company such as holding annual general meeting are compared to partnership
  • There are more formalities in forming a company as compared to partnership such as formulating a memorandum of Association and article of association
  • It is more expensive to set up as compared to a sole trader
  • It is not flexible as compared to a sole trader as it is governed by two documents drawn up when it is registered as a company




  • It is taken over if another company buys 51% of its shares
  • There is little secrecy as its accounts must be published annually.