ENTREPRENEURIAL PLANNING
FINANCIAL PLANNING AND ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Finance can be obtained through selling shares
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There is no chance of takeovers
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Shareholders have limited liability
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Open to more public scrutiny
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Detailed explanation-1: -Disadvantages of Public Companies Public companies are vulnerable to increased scrutiny from the government, regulatory agencies, and the public. The company must meet various mandatory reporting standards that are set by government entities such as the SEC and the IRS.
Detailed explanation-2: -the company can be expensive to establish, maintain and wind up. the reporting requirements can be complex. your financial affairs are public. if directors fail to meet their legal obligations, they may be held personally liable for the company’s debts.
Detailed explanation-3: -A public limited company is more vulnerable to takeovers than a private company because public companies have shares that can be bought or sold on the public market. This means that anyone with enough money could buy out a public limited company (which is known as a ‘hostile takeover’) and take over management of it.