Topics covered: Business sectors and stakeholders
• Meaning
• Unlimited Liability
• Tertiary sector.
• Internal and external stakeholders
Bare Foot Private Limited located in Mumbai India. All shares are held by three brothers of the family. BFPL has been involved in import and export of sports shoes. The company imports ready shoes from European countries and sold in India.
BFPL also has two manufacturing units in Mumbai where sports shoes are manufactured. About 30 5 of the total output is sold in the domestic market and the rest is sold in overseas markets like Sri Lanka, Bangladesh, Singapore, Hong Kong, and other smaller countries in Asian continent.
The company’s growth rate has been tremendous and in some years, it is more than the estimation.
The senior management has been in discussion to raise more capital to expand operations and hence, the management team has consulted exports in Bombay Stock Exchange (BSE).
Though the ‘go public’ involves lengthy legal and administrative formalities, due to brand image, experts feel that IPO will be oversubscribed. One of the members of the senior management team expressed his concerns over dilution of ownership and brand image.
Questions:
a) What do you mean by the term, ‘go public’? [2 marks]
b) What do you mean by the term ‘IPO’? [2 marks]
c) Explain two differences between a private limited company and public limited company. [4 marks]
d) Identify and explain two benefits of going public for BFPL [4 marks]
e) Identify and explain two problems if BFPL becomes a public limited company other than dilution of ownership and brand image. [4 marks]
