6 Analyse the disadvantages of private limited company. [6]

[Sodais sajid]

KN: Limited Capital Formation
AN: Private limited companies may face challenges in raising large amounts of capital compared to their public counterparts since they can't sell shares to the public
AN+: Thus it is hard to expand in a private limited company
KN: Ownership and Control Concerns
AN: When there more control for the owners, it can also lead to conflicts, especially if there are disagreements among a small group of owner
AN+: Thus can lead to wrong decisions

[Abbas17]

(KN) cannot offer it's shares to the general public
(AN) meaning that due to this the business won't be able to raise and then invest large sums of capital into the business,
(AN+) hence meaning that rapid expansion of the business may not be as easy and quick.

(KN) shares of the private Ltd company cannot be shared or transferred to someone else without the permission of other shareholders
(AN) thus due to this it makes people reluctant to buy shares of the business as they think that they may not be able to sell their shares if they require their investment back,
(AN+) thus due to this rapid business expansion becomes even more difficult due to the lack of capital being invested into the business.

[Areena]

Competition is Growing 
[AN]A company's level of competition rises when it goes public because rivals can more easily counter its business plans. +AN+hence, in order to increase output, businesses must implement stronger strategies.


KN]Shareholders cannot leave or enter at will
 [AN]A private limited company's inability to allow shareholders to leave the business puts their investment at risk, 
making it challenging to draw in new investors.

[Mahnoor Nadeem]

[KN]: Difficulties in raising capital
[AN]: Since they cannot sell shares to public it would be difficult to raise high sums of capital
[AN]: It would restrict the business from growing and expanding further

[KN]: Disagreements between shareholders
[AN]: Shareholders might not agree on some decisions which can lead to conflicts.
[AN]: In a private limited company shares cannot be transferred to someone without the acknowledgment of other shareholder making other potential investors reluctant in investing

[Huma Junaid]

[KN]Private limited companies have specific legal and regulatory requirements to fulfill
[AN] which may demotivate the owner as the process is elongated
[AN+] hence reducing the chances of new business start ups

[KN]Costs
[AN] increasing the costs even before starting up may decrease chances of hitting breakeven
[AN+] hence more chances of business with decreased investment