CIE Business-Studies Paper-1: Specimen Questions 14 - 14 of 14


Priya has been General Manager of a business for a number of years. She has recently identified a business opportunity that would require a lot more capital. Her financial advisers recommend that she converts the business into a Public Limited Company.

Question number: 14 (1 of 1 Based on Passage) Show Passage

Short Answer Question▾

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Discuss the consequences to this business of the possible change to a Public Limited Company.


Changing a company from private limited to public limited has both merits and demerits:


  • Shares can be advertised.
  • Shares can be sold through the stock exchange.
  • Large places may find it easier to borrow from banks. · Cheaper borrowing and bulk purchasing.
  • Shareholders have limited liability.
  • The business has separate legal entity. There is continuity even if any of the shareholders die.


  • Going public can be expensive.
  • Some places can grow so large that they may become difficult to manage effectively.
  • Risk of takeover by rival companies who have bought shares in the company.
  • In order to protect the interest of the ordinary investor there are strict controls and regulations to comply. These companies have to publish their accounts.