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Disadvantages of public limited companies

Answer Text:
Disadvantages of public limited companies
i) High costs of formation: The process of registering a public company is expensive and lengthy. Some of the costs of information are legal costs, registration fees and taxes
ii) Legal restrictions: A public company must comply with many legal requirements making its operations inflexible and rigid
iii) Alienation of owners: Shareholders non-participation in management is a disadvantage to them
iv) Diseconomies of scale: The large size and nature of business operations of public limited companies may result in high running/operation costs and inefficiency
v) Double taxation: There is double taxation since the company is fixed and dividends distributed to the shareholders are also taxed
vii) Inflexibility: Public limited companies cannot easily change its nature of business in response to the changing circumstances in the market. All shareholders must be consulted and agree