A public limited company is a type of corporate entity that allows the general public to own shares, which are traded on public stock exchanges. This structure enables a wide range of investors, including brokers and traders, to buy and sell equity in the company. Public limited companies are subject to more stringent regulations and reporting requirements compared to private companies. In India, the primary legal framework for public limited companies is the Companies Act of 2013. A public limited company must have at least seven members, with no upper limit on the number of shareholders.
Types of Public Limited Companies
Public limited companies are mainly of two types:
- Listed Company: Shares of a listed public company are traded on stock exchanges, providing liquidity and allowing a wide range of investors to buy and sell shares.
- Unlisted Company: Unlisted public companies do not trade shares on stock exchanges, limiting share transfers and facing less regulatory oversight, making them ideal for companies wanting broader ownership without the complexities of public trading.
Benefits of Public Limited Company Registration
- Access to Capital: Public companies can raise funds by selling shares to the public, facilitating growth and expansion.
- Financial Flexibility: They can attract investment through various financial instruments, boosting investor confidence.
- Limited Liability: Shareholders’ liability is limited to their investment, protecting personal assets.
- Growth Potential: Going public provides the capital for expansion and operational efficiency.
- Flexible Ownership: A public limited company requires at least 7 shareholders, with no upper limit on membership.
- Easy Share Trading: Shares can be easily bought or sold on the stock market, enhancing liquidity for investors.