Public Limited Company

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Public Limited Company

A Public limited company is company under companies Act 2013 which has a separate legal existence from its members and allows to offer shares to general public. These companies are required to add word ‘limited’ after their names and must have  minimum three directors and minimum seven members to incorporate, There is no restriction on the maximum number of members in comparison to a private limited company where maximum no members shall not exceed 200

Public Limited Companies in India is considered to be a more transparent business model as it allows a significant degree of separation between operations and ownership. These companies can raise funds from general public by selling its shares and the shares allotted to the members are freely transferable. Public limited companies have perpetual succession and the liability of each member is limited to the extent of the amount of shares subscribed by them. It is a preferred form of incorporation for companies who intend to list their share on any stock exchange having nationwide trading terminal.

Distinct features of Public limited company

Minimum and maximum no of members
Public company requires to have minimum 7 members and there is no limit for maximum no of members. For directors a public company should have minimum of 3 directors and maximum is 15, such number can be increased by passing a special resolution.
Perpetual succession
Public companies have perpetual succession therefore it has uninterrupted existence even on death or insolvency of its shareholder, its existence ends only when the company is legally dissolved.

Raising Funds
Public limited companies enjoys better avenues for raising funds, it can either issue shares, debentures to public and accept deposits from public subject to certain compliance of the provisions of Companies Act 2013.

Limited Liability
In a public limited company the liability of the members in respect of the company’s debts is limited to the extent of unpaid amount of the shares subscribed by them. Personal assets of the members are not liable for the debts and losses of the company.

Borrowing Capacity
Public companies have may option open for raising funds such as issue of shares to public, issue of debentures, public deposits and loan from banking and financial institutions  Banking and financial institutions prefer to lend large financial assistance to a public limited company rather than partnership firms or proprietary concerns. Public company has varied option to raise money.

Separate legal entity
The term separate legal entity states that company and its shareholders both have separate identities. A company is therefore a legal person established under the eye of law. And has legal capacity to own property and also incur debts.

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Naveen Goyal
Asst. Vice President,
Tel: +91 9911095297
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