Limited companies — Ltd vs PLC
AQA GCSE Business Studies revision on Limited companies — Ltd vs PLC. Aligned to the AQA GCSE Business 8132 specification. This bank has 10 practice questions on this topic.
Sample questions (3 of 10)
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Question 1
Which of the following is a primary requirement for a business to become a public limited company (PLC)?
- A) A minimum share capital of 50,000 pounds
- B) At least 50 shareholders
- C) A turnover exceeding 1 million pounds
- D) Employment of over 250 staff
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Answer: A minimum share capital of 50,000 pounds
In the UK, a company must have an allotted share capital of at least 50,000 pounds to be registered as a PLC. This ensures that only businesses of a certain scale can offer shares to the general public, providing a level of financial security for potential investors.
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Question 2
What is the term for the document that must be filed with the Registrar of Companies to incorporate a limited company?
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Answer: Articles of Association
The Articles of Association act as the constitutional document for a company, outlining the internal rules for management and decision-making. Along with the Memorandum of Association, it is a legal requirement for the formation of any limited company in the UK.
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Question 3
Which of these is a significant disadvantage of converting a private limited company (Ltd) into a public limited company (PLC)?
- A) Increased risk of hostile takeovers
- B) Loss of limited liability status
- C) Requirement to pay higher corporation tax
- D) Inability to issue new shares
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Answer: Increased risk of hostile takeovers
When a company becomes a PLC, its shares are available to the general public on the stock market. This allows outside investors to purchase a large portion of shares without the current board's approval, potentially leading to a change in ownership or control against the wishes of the original directors.
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7 more questions on Limited companies — Ltd vs PLC — plus mistakes tracking and spaced repetition across the whole Business Studies spec.