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What Is a Public Limited Company (PLC)?
A public limited company (PLC) is a public company in the United Kingdom. PLC is the equivalent of a U.S. publicly-traded company that carries the Inc. or corporation designation. The use of the PLC abbreviation after the name of a company is mandatory and communicates to investors and to anyone dealing with the company that it is a publicly-traded corporation.
A Public Limited Company under Company Act 2013 is a company that has limited liability and offers shares to the general public. Its stock can be acquired by anyone, either privately through (IPO) initial public offering or via trades on the stock market.
A Public Limited Company is strictly regulated and is required to publish its true financial health to its shareholders.
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 losing only the amount they have paid for the shares they own.
So, some advantages of a public limited company are;
- Led by Board of Directors
- Limited Liability
- Number of Members
- Transferable shares
- Life Span
- Financial Privacy
- Large Capital
- The company has separate legal existence apart from its members who compose it.
- Its formation, working and it’s winding up all its activities are strictly governed by rules, laws, and regulations.
- A company must have a minimum of seven members but there is no limit as regards the maximum number.
- The company collects Its capital by the sale of its shares and those who buy the shares are called the members. The amount so collected is called the share capital.
- The shares of a company are freely transferable and that too without the prior consent of other shareholders or subsequent notice to the company.
- The liability of a member of a company is limited to the face value of the shares he owns. Once he has paid the whole of the face value, he has no obligation to contribute anything to pay off the creditors of the company.
- The shareholders of a company do not have the right to participate in the day-to-day management of the business of a company. This ensures the separation of ownership from management. The power of decision-making in a company is vested in the Board of Directors, and all policy decisions are taken at the Board level by the majority rule. This ensures the unity of direction in management.