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Hello Auditor

What are the key features of a Public Limited Company?

1. Separate Legal Entity

  • A Public Limited Company is recognized as a distinct legal entity.
  • It can own property, enter into contracts, and sue or be sued in its name.
  • The existence of the company is independent of its shareholders.
  • It continues to operate even if the ownership or management changes.
  • This feature ensures business continuity and legal protection.

2. Limited Liability

  • The liability of shareholders is limited to the amount unpaid on their shares.
  • Personal assets of shareholders are not at risk for company debts.
  • Creditors cannot claim more than the value of shares held.
  • This encourages public investment without fear of excessive risk.
  • Liability structure increases trust and promotes business security.

3. Number of Members

  • Requires a minimum of 7 shareholders to be registered.
  • There is no maximum limit on the number of shareholders.
  • A minimum of 3 directors is also required for governance.
  • The broad member base allows for wide public participation.
  • Shareholding can change without affecting the company’s structure.

4. Share Capital and Transferability

  • Shares are freely transferable unless restricted by law or regulation.
  • The company can raise capital by issuing shares to the public.
  • Public issue of shares is done through an IPO or FPO.
  • Shareholders can trade shares on recognized stock exchanges.
  • Capital structure is flexible to meet funding needs.

5. Regulatory Compliance and Transparency

  • Governed by the Companies Act, 2013, and SEBI regulations.
  • Must file annual reports, financial statements, and disclosures.
  • Requires regular board meetings and annual general meetings.
  • Statutory audit and appointment of independent directors are mandatory.
  • Compliance ensures accountability and boosts investor confidence.

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