Question

. Sanjay has developed a product that helped disabled people handle kettles and saucepans more easily. He approached different manufacturers to see what they thought of the product. However, none of them are willing to produce it for him. As a result, Sanjay decided to set up a business as a private limited company and manufacture the new product himself.

Using the case study above, evaluate whether Sanjay's should consider changing to public limited company or remain as a private limited company

this is an igcse edexcel 12 marker so answer accoringly

Answer 1

Sanjay should evaluate his financial needs, level of control, and capacity to manage increased legal compliance before deciding whether to change to a public limited company or remain as a private limited company.

Step-by-step explanation:

Sanjay's decision to set up a private limited company to manufacture the new product himself seems appropriate based on the given case study. However, there are several factors that Sanjay should consider before deciding whether to change to a public limited company or remain as a private limited company.

1. Financing: Sanjay needs to consider the amount of funding required to expand his business. If he needs significant capital, going public and issuing shares to the public may be a better option to raise funds. Alternatively, if he has sufficient resources and does not require external funding, he can continue as a private limited company.
2. Risk and Control: By staying as a private limited company, Sanjay maintains control over the operations and decision-making processes. However, if he decides to go public, he will have to share control and decision-making responsibilities with shareholders, which may result in a loss of control over his product and business.
3. Legal Compliance and Reporting: Converting from a private limited company to a public limited company involves more stringent legal compliance requirements and extensive financial reporting. Sanjay needs to consider whether he has the resources and capabilities to handle the increased regulatory burden.

Ultimately, Sanjay should carefully evaluate his financial needs, level of control, and capacity to manage increased legal compliance before deciding whether to change to a public limited company or remain as a private limited company.