What is a Public Limited Company?

What is a Public Limited Company?

A public limited company is a company limited by its shares and is governed by the Company Act of 2013. It provides shares to the general public.The benefit of Public Limited Company is that it can provide stocks to anyone either privately through initial public offering or via trades on the stock market. Its shares are traded in fixed deposits. Its features are similar to a private limited company and it also provides more transparency when it comes to the transfer of shares.

Characteristics of a Public Limited Company:

Directors:

According to the provision of the companies Act, 2013 it is important to have a minimum of 3 directors to start a private limited company.There is no restriction on the maximum number of directors.

Limited Liability:

The shareholders’ liability is limited and therefore a shareholder of a public limited company cannot be held responsible for any loss or debts of the company.

Paid-up capital:

The minimum capital to start a public limited company is 5 lacs INR or a higher amount as prescribed under the act.

Name:

The public limited company must add the word ‘’limited’’ after their name. It is a compulsory requirement under the Companies Act, 2013.

Why choose to opt for a Public Limited Company:

There are many advantages that a Public Limited Company provides:

  • More capital as shares are offered to the general public in large amounts. Anyone can invest in a public limited company due to which capital investment of the company gets improved.       
  • Public Limited Company helps in resulting better business opportunities as it is listed on the stock market. This ensures that mutual funds, hedge funds and other traders take note of business of the company.
  • The risk is less as the shares are sold out to the public at large, hence the risk of the market is spread out.
  • Due to less risk, it gives you the perfect opportunity to expand the business which in turn ensures growth as you can invest in new projects from the money raised through shares.
  • If you are looking for a voluntary association and want to have stability in your business then a Public Limited Company can provide you with both. It has a separate legal existence and also has features similar to a Private Limited Company.
  • Since a Public Limited Company is a platform to generate capital from external sources, it is less risky and also supplies higher growth and comprehensive possibilities to a large organization.

Team Delfyle wishes you the very best of luck for your amazing journey ahead. In case of any further queries, feel free to get in touch with us at info@delfyle.com for a chat, absolutely free of cost!

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