Factors that influence the
choice and change of
ownership
1.
2.
WDP changing from a LTD to
a PLC
Or taking on more
shareholders as an LTD
Reasons WDP might change
ownership
WDP may change ownership for the
following reasons:
1. To raise more finance, in order to help
the business achieve their objectives.
Advantages of WDP operating as
a PLC
1.
2.
3.
4.
Owners have limited liability
Shares can be floated (sold) to the
general public – increase source of
capital.
Divorce between ownership and control.
Greater ability to raise finance through
banks.
Disadvantages of WDP forming a
PLC
1.
2.
3.
They must have at least £50,000 of
shares on the stock market.
They have to publish their accounts
Risk of take over.
Ad/disadvantages of WDP
remaining a LTD and taking on
more shareholders (John)
WDP remains a family run business.
2. Source of extra finance.
3. They retain control of the business.
Disadvantages:
1. Limit to the amount of capital WDP can raise
2. Harder for owners to sell shares.
1.
Exam Questions
WDP continued to grow and prosper. Tom and
Dee decided to change ownership to a PLC.
1.
2.
To what extent do you think this a good
business decision? (7 marks)
Tom and Dee decided to remain an LTD and
invite John to become a shareholder. To what
extent do you think this a good business
decision? (7 marks)