25 May What is a Public Limited Liability Company
The Public Limited Liability Company are like Private Limited Companies but here, the shares are freely traded to the public and they are tradeable in stock exchange as well. It can also be privately held by other PLC. It is a separate legal entity which has its own identity apart from its owners and they are listed on stock exchange usually.
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Main Features Of Public Limited Liability Company :
Some of the salient features that carry the power to give prominence to this kind of corporation are given below.
1- Legal Entity:
The feature that makes Public Limited Company the most prominent is the fact that it has its own legal identity separated from its owners and shareholders.
2- Unlimited Flexibility:
The company can have a minimum of seven members that are opted to volunteer and the maximum number of owners and shareholders is unlimited. This factor makes it the most flexible platform to provide business opportunities.
3- Share Capital:
The capital is collected by selling shares. People who buy the shares become members. Share capital is the collected amount after selling the shares.
4- Transferable Share Flexibility:
As a member of a Public Limited Liability Company is the fun factor of being able to transfer the shares without the consent of other members or the company.
5- Separate Management:
Business management of the company for day-to-day work is ensured to be separated from the ownership. Being the owner, one has no right to intervene in management working.
6- Rule of Majority:
Decision-making and policies are made on the board level where the majority rule. The power is entrusted in the Board of Directors.
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The retirement and death of the shareholders do not affect the company due to the factor of having its own independent existence apart from the owners.
Pros and Cons of A Public Limited Liability Company:
Shareholders of the company will only lose the amount they have pooled in the company due to the limited liability. The bank can’t touch their personal assets. There are more advantages and disadvantages about Public Limited Liability Companies that are listed below.
Responsibility of the Shareholders is Limited:
Since the company does not belong to the owners or the members due to its own independent existence, so, the liability of the owners becomes limited. In case of losses, the bank will only recover from the assets of the company. The owners will only face the amount they have invested in. The personal assets of the owners are safe.
The minimum number of members for a Public Limited Liability Company is seven, whereas the maximum number of members is limitless. Being a public company, it’s the only platform that offers this kind of work structure to members.
Span Of Life:
The demise of any director or member does not affect the company. In any such case of demise or retirement, they elect the new replacement after holding elections for this purpose.
Large Capital Opportunities:
The option of issuing shares to the public or in the stock exchange also shares the element of raising the capital in need.
True Worth of Shares:
The company reveals the true worth of its shares to the owners and members which leads to vivid financial security.
Along with the enjoyable factors, Public Limited Liability Company comes with some of the disadvantages that are listed below.
We have learned that the investors are protected in case the company fails and faces losses as the banks will not reach the personal assets. However, the existing assets of the company will be seized to clear the number of debts.
Due to the open records to the public, the Public Limited Liability Company finances with details of losses and profits are also open to them. This is the reason for an ongoing public inspection for the company.
In a Public Limited Liability Company, taking decisions is a slow process as it has to undergo debates and voting of the board of directors along with powerful shareholders. This makes the process of decision-making very slow and exhausting. At times, the decisions are not even made at all.
To Conclude, we may feel attracted to the security of finances but the facts based on the fatigue of the slow decision-making process that too with every bit of detail open to the public are not to be ignored.
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