A Public Limited Company, also known as a PLC, is a type of business entity that publicly trades its shares on stock exchange platforms. As a result, it has access to a vast pool of investors, making it an attractive option for entrepreneurs looking to raise capital. A Public Ltd Company can have an unlimited number of shareholders, and the liability of each shareholder is limited to the amount of capital they have invested in the company. In this article, we will provide a brief note on Public Limited Company, including its definition, advantages, disadvantages, and general features. By the end of this article, you will have a comprehensive understanding of Public Limited Companies and whether this type of structure is suitable for the needs of your business entity.
Public Limited Company Meaning: To understand the meaning of Public Limited Company, you must first understand the relevance of the words “Public” and “Limited”. The word “Public” here indicates that the shares issued by a Public Limited Company are listed and open for trade on public platforms like the Stock Exchange Markets. On the other hand, the relevancy of the word “Limited” here is that the company limits the liabilities of all its shareholders to the specific capital they’ve subscribed, or the total worth of the amount of shares they’ve bought in the company. So, a Public Limited Company is basically an incorporated business structure which limits the liability of its shareholders and trades its shares on Public Stock Exchange Platforms.
Public Limited Company Definition: A Public Limited Company is governed by the Companies Act of 2013, which defines it as a company which is not a “private company”, “has a minimum amount of capital as prescribed” and “has a minimum of seven shareholders”. To better understand this, let us go through each of these phrases one by one.
While Public Limited Companies offer several advantages over other types of business entities, they also come with a range of disadvantages. These disadvantages can make public limited companies less appealing for some entrepreneurs or investors. In this section, we will explore the various disadvantages of a public limited company in more detail. By understanding the potential drawbacks of a public limited company, you can make an informed decision about whether this type of business entity is right for you.
In conclusion, a Public Company is a type of business entity that offers numerous advantages, such as greater access to capital, enhanced brand recognition, and limited liability protection for shareholders. However, it also comes with various disadvantages, including increased regulatory compliance, dilution of ownership, and vulnerability to hostile takeovers. Despite these drawbacks, many entrepreneurs and investors choose to set up Public Limited Companies because of their potential for growth and scalability. If you are considering starting a Public Limited Company or investing in one, it’s essential to weigh the advantages and disadvantages carefully to make an informed decision. With the right strategy and management, a Public Company can be a successful and profitable business venture.