Whether Facebook Can Benefit from the Changing Between Private Limited Company to Public Limited Company

Topics: Limited company, Types of companies, Corporation Pages: 4 (1517 words) Published: March 16, 2013
Facebook is a social net working service, which is started in the United States by Mark Zuckerberg with his friends in 2004. The website's membership was initially limited by the founders to Harvard students, but was expanded to other colleges, and gradually globalization. In 2012, the fonder of Facebook, Mark Zuckerberg decide to convert the structure of Facebook from private limited company to public limited company. Facebook values shares at £24 each, and that its shares would began trading in New York on 18th of May 2012. It is seem that Facebook would be worth £66bn at this price. The following will analyse whether Facebook can benefit from the changing between private limited company to public limited company.

Ltd is the short for Private Limited Companies. Plc is the short for Public Limited Companies. Ltd is a legal structure that a small business usually chooses it to start, while Plc is much bigger than the scope of Ltd. The capital of start a private limited company will often be £100, actually there is no minimum capital requirement for setting up a private limited company. However, the capital of starting a public limited company is at least £50,000. Both Ltd and Plc can be owned by one entrepreneur, and others can invest it as an investor. But Ltd usually operates by a family or a small group of friends, and the shares of Ltd only can sell between family and friends. So Ltd cannot be floated on the stock market. This means Ltd cannot raise capital from the general public. Plc is floated on the stock market; there is no limited on the members of buying shares. It is easy that Plc can raise a number of extra finance. A legal requirement for these two types of companies is that they must state ‘Ltd’ or ‘plc’ after the company name, for example Phones 4U Ltd or British Airway PLC.

The biggest advantage of being Ltd and Plc is that the company has limited liability. This means the owner and the company are different in law. So if a company is fail,...
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