Merits and demerits of private and public companies

Question

Evaluate and contrast the merits and demerits of private and public companies.

Answer 1

Once of the major merits of a public limited company is that it can promote its shares for a sale to public and, if it is listed on stock exchange, its shares can be traded in stock market. But, a private limited company’s shares can’t be advertised and can only be provided for sale privately. One of the major advantages of the private company is that, unlike the public listed company, it is not appreciative to comply with the stock exchange regulations and most small private companies don’t have to disclose as much financial information as the public company. Additionally, the formalities for setting up the private limited company are less complex than for the public company.