Public Limited Company

According to the Companies Act 2013, a public limited company is a type of business structure which is not a private limited company; meaning, the company which is not managed by a group of private individuals. In fact, it is the legal designation of a limited liability company which has offered shares to the public and has limited liability. The term public limited company is commonly known in western countries as “PLC”.

The shares of the public limited companies are available for public subscription and can easily be transferred. As per the Act, only a public company can be listed on stock exchanges.

A Public Limited Company can issue securities to the general public through an initial public offering (IPO). Only the shares of a public company can be traded on stock exchanges. Public companies are subject to higher levels of reporting, regulations, and public scrutiny.

While comparing with a Private Limited Company, a Public Limited Company has more stringent regulatory requirements. All of the public limited companies’ activities from its formation, working, to winding up are strictly governed by laws, rules, and regulations.

The Indian Companies Act of 2013 contains the provisions regarding the legal formalities for setting up of a public limited company.

Highlights of a Public Limited Company

  • Requires a minimum of 7 shareholders
  • Minimum authorized capital of Rs. 5 Lakh
  • No minimum paid-up Capital
  • No restriction in maximum number of shareholders
  • No restriction in transferability of shares
  • Statutory meeting obligations
  • Board constituted  to govern the company

In short, a Public Limited Company is a business entity limited by shares, whereby unlimited with the maximum number of shareholders and with permission to transfer shares and accept deposits from the public.

Public Limited Company is required to comply with many compliance clauses as mandated by the Act. If it is listing its shares on the Stock Exchange through an IPO, then it has to comply with listing requirements also as prescribed by the concerned Stock Exchange.

A public limited company can list its shares on the stock market as it has no limit on its number of shareholders and can raise capital from the public through IPO. After listing of shares; shares of a public limited company can be easily traded on the stock exchange.

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