Public Company

OVERVIEW

If you want to start and grow a business on a large scale, then Public limited companies could be one of the best options available. Public Limited companies, often called PLCs, are a common type of business structure that allows a company to raise capital by issuing shares to the public.

DEFINITION

The Companies Act of 2013 defines a company which is not a "private company", "has a minimum amount of capital as prescribed" and "has a minimum of seven shareholders". It is a type of business entity that is owned by shareholders and whose shares are traded on various stock exchanges. Shares of public limited can be acquired by anyone, either through Initial Public Offering (IPO) or via trades on the stock market.

CHARACTERSTICS

  • Directors: Minimum of 3 directors are required and there can be a maximum of 15 directors.
  • The liability of each shareholder is limited.
  • A public limited company is not required to have a minimum paid-up capital. However, it should have an authorised share capital of a minimum of Rs.1 lakh.
  • There is a requirement under the Act for public limited companies to issue a prospectus. A prospectus is a comprehensive statement of the affairs of the company issued by a public limited company for its public. 
  • It is a compulsory requirement under the Act for all public companies to add the word ‘limited’ after their name.

BENEFITS

  • RAISING CAPITAL: Public companies can raise large amounts of capital by selling shares to the public.
  • GROWTH OPPORTUNITIES: Public companies can use their capital to fund research and development, marketing, and other growth initiatives.
  • MERGERS AND ACQUISITIONS: Public companies can use their stock to acquire other companies.
  • EMPLOYEE INCENTIVES: Public companies can offer stock options and other equity-based incentives to attract and retain top talent.
  • BRAND ENHANCEMENT: Public companies can become more visible and enhance their brand.
  • LIQUIDITY: Public companies can provide liquidity for shareholders and founders.
  • ECONOMIES OF SCALE: Public companies can benefit from economies of scale, which can lead to lower prices and better service.
 
     
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