somebody explain this in detail pleasee
> describe and evaluate the effects of changes in structure of business organisations.
is it asking for the benefits and disadvantages of, for instance, changing from a sole proprietorship to a public limited company?
thankyou.
Yes. In your example if you are converting from a sole trader to a public limited company. The advantages and disadvantages would be as follows :
Advantages :
- More capital as shares of the company can be traded on the stock exchange
- Continuity as even when the original owner dies, the company can pass on
- Separate legal entity (i.e. owner cannot be sued)
- Limited liability (i.e. shareholders can only lose their principle)
- Owner does not have to work long hours
Disadvantages :
- Needs to disclose financial account to public
- Original owners may lose control of the company
- Company is run by a director appointed by the shareholders
- Needs to hold AGM (Annual general meeting)
- Longer decision making time as company matters needs to be voted
In practice you will need three each, the question has appeared as a 6 marks question in the 09 June paper.
