Q:

What is the difference between a PLC and an LTD?

A:

A PLC, or public limited company, trades shares publicly on the stock exchange while an LTD, or limited company, trades shares privately. Both have set rules for the buying and selling of shares.

Limited companies are incorporated, affording them legal identities as well as the rights to own their own assets and sue. Ownership is controlled by dividing up shares. Shareholders are attracted to limited companies because they have limited liability, meaning the shareholders are not held responsible for the debts if the company fails. Shareholders are not necessarily involved with the company unless they are appointed to the board of directors.

A private limited company does not trade its shares on the stock exchange, and shareholders are obliged to offer their shares to other shareholders before third parties. The restrictions on ownership are designed to regulate and prevent hostile takeovers. The number of shareholders is set, with the average being 50 shareholders.

A public limited company trades on the stock exchange, meaning anyone is able to buy shares. Public companies have to be transparent with their finances so investors can accurately determine the value of the shares. Public limited companies are also known as publicly held companies.


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