A public limited company is a form of business organization that operates as a separate legal entity from its owners. It is formed and owned by shareholders. Shares of a public limited company are listed and traded at a stock exchange market freely. Shareholders of a public limited company are limited to potentially lose only the amount they have paid for the shares they own.

Public Limited Companies requires at least 3 directors, seven members and there is no cap on the maximum number of members. A public limited company has all the advantages of private limited company and the ability to have any number of members, ease in transfer of shareholding and more transparency.

Some basic features of public limited company are:-

  • Perpetual Succession
    A company has 'perpetual succession', that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.

  • Separate Legal Entity
    Public limited company is a legal entity established under the Companies Act, 2013. Hence, a company has a range of legal capacities including opening of a bank account, hiring of employees, taking on equity or obtaining licenses and more as an independent corporate entity. The members (Shareholders/Directors) of a company have no personal liability to the creditors of a company for company's debts.

  • Raising Capital Through Public Issue Of Shares
    The most obvious advantage of being a public limited company is the ability to raise share capital, particularly where the company is listed on a recognised exchange. Since it can sell its shares to the public and anyone is able to invest their money, the capital that can be raised is typically much larger than a private limited company. It’s also possible that having stock listed on an exchange could attract investment from hedge funds, mutual funds and other institutional traders.

  • Other Finance Opportunities
    Banks and other financial institutions may be more willing to extend finance to a public limited company, particularly one that is listed. The company could also be in a better position to negotiate favourable interest rates and repayment terms on loans.

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