171k views
16 votes
Explain one disadvantage of selling shares as a source of raising finance in a private limited company.

User Emremrah
by
4.0k points

1 Answer

2 votes

Answer:

see below

Step-by-step explanation:

By shares are sold ,the new shareholders become part owners in the company. They get rights to vote, and share in the profits of the business. The right to vote influences who becomes a member to the board of directors.

By shelling shares, the founders of business gives away their controlling rights. Investors may choose directors that oppose founders. In some circumstances, investors kicked out founders from the business.

User Gurvan
by
3.3k points