A Public Limited Company (PLC) is a type of limited company that offers its shares to the general public and is listed on a stock exchange. This allows the company to raise capital from a large number of investors, providing access to a broader pool of funds.
As per Section 2(71) of the Companies Act, 2013, a Public Limited Company means a company which is not a private company. Public Limited Companies are subject to stringent corporate governance norms and disclosure standards to protect the interest of the Shareholders.
1. Minimum Number of Members: Minimum 7 members are required to form a Company. 2. Minimum Number of Directors: Minimum 3 Directors are required to form a Company. 3. Name: Name must end with "Limited" 4. Commencement of Business: Can start business after receiving Certificate of Commencement of Business from ROC 5. Regulatory oversight: The company is governed by the SEBI and Companies Act, 2013. 6. Share transferability: Shares can be freely traded on stock exchanges, allowing investors to buy and sell them. 7. Perpetual succession: Continuity assured despite any change in membership.
1. Listed Company:
A listed company, also known as a publicly traded company, is a company whose shares are listed on a Stock Exchange such as Bombay Stock Exchange (BSE) or National Stock Exchange (NSE). This means that the company's shares can be bought and sold by the general public, and the company is subject to certain reporting and regulatory requirements.
2. Unlisted Company:
The company's shares are not listed on any recognized stock exchange in India, which limits the ease of share transfer compared to Listed Company, this reduces regulatory obligations.
1. Access to Capital: Public companies can raise funds more easily by issuing shares to the public. This access to capital can fuel growth, fund new projects, and expand operations more effectively than private companies, which often rely on private investors or loans.
2. Liquidity: Shares of public companies are traded on stock exchanges, providing liquidity for shareholders. This means that investors can buy and sell shares relatively easily, which can make investing in public companies more attractive compared to private ones, where shares are not as easily tradable.
3. Employee Benefits: Public companies often offer stock options or other equity-based compensation, which can be a significant draw for top talent. This can help in recruiting and retaining skilled employees.
4. Market Valuation: The market value of a public company is continuously assessed through its stock price, providing a transparent and real-time valuation of the company. This can be useful for various strategic decisions.
5. Regulatory and Reporting Standards: Public companies face rigorous regulatory and reporting requirements, this transparency can be seen as a positive attribute, as it demonstrates a commitment to governance and accountability.
Advantages:
1. Limited Liability: Shareholders' personal assets are protected, and they are only liable for the amount they invested. 2. Ability to Raise Capital: PLCs can raise large amounts of capital by issuing shares to the public. 3. Liquidity: Shares can be easily bought and sold on stock exchanges. 4. Professional Management: PLCs are required to have a board of directors and professional management, which can lead to better decision-making. 5. Enhanced Credibility: PLCs are often viewed as more credible and stable than private companies.
Disadvantages:
1. Complexity and Cost: Setting up and maintaining a PLC can be complex and costly. 2. Loss of Control: Shareholders may lose control of the company if they are not part of the majority ownership. 3. Public Scrutiny: PLCs are subject to public scrutiny and reporting requirements. 4. Risk of Takeovers: PLCs are vulnerable to hostile takeovers. 5. Regulatory Compliance: PLCs must comply with strict regulations and reporting requirements. 6. Share Price Volatility: Share prices can fluctuate rapidly, affecting the company's value.
Q1: What is a Public Limited Company (PLC)? A1: A Public Limited Company (PLC) is a type of corporate structure that is owned by the public and its shares are traded on a stock exchange.
Q2: What are the minimum requirements to start a Public Limited Company? A2: Typically, a Public Limited Company requires a minimum of seven shareholders, two directors and a minimum share capital (which varies by jurisdiction).
Q3: What is the difference between a Public Limited Company and a Private Limited Company? A3: The main difference is that a Public Limited Company can raise capital from the public, while a private limited cannot. Additionally, Public Limited Company are subject to more regulations and reporting requirements.
Q4: How do Public Limited Company raise capital? A4: Public Limited Company can raise capital by issuing shares, debentures, or bonds to the public through an initial public offering (IPO) or subsequent offerings.
Q5: What are the reporting requirements for Public Limited Company? A5: Public Limited Company must file annual reports, financial statements, and other documents with regulatory bodies, such as the MCA.
Q6: Can anyone buy shares in a Public Limited Company? A6: Yes, anyone can buy shares in a Public Limited Company through a stock exchange, subject to regulatory requirements.
Q7: How are Public Limited Company governed? A7: Public Limited Company are governed by a board of directors, which is elected by shareholders.
Q8: What are the tax implications for Public Limited Company? A8: Public Limited Company are taxed on their profits, and shareholders are taxed on dividends received.
Q9: Can a Public Limited Company be converted to a private company? A9: Yes, but it requires approval from regulatory bodies and shareholders.
Q10: What are the advantages of listing on a stock exchange? A10: Listing on a stock exchange provides access to capital, increased visibility, and liquidity for shareholders.