GK
BUSINESS MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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High establishment costs
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Complex structure
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More accountability
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Unlimited liability
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Detailed explanation-1: -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-2: -there are more complex accounting and reporting requirements. there is a greater risk of a hostile takeover by a rival company as the company cannot control who buys its shares. shareholders will expect to receive a percentage of the profits as dividends. shareholders may clash when making decisions about the business.
Detailed explanation-3: -Some of the disadvantages of operating a public corporation include: Difficult to manage. Risk of producing inefficient products. Financial burden.
Detailed explanation-4: -all assets of company members are liable to meet company obligations; company members are closely connected to the company and also greatly depend on each other; the form of legal organisation is riskier than that of corporate entities (e.g. LLC).