Public Limited Company

A public limited company is a voluntary association of members which is incorporated and, therefore has a separate legal existence and the liability of whose members is limited. Main features are:

  • Separate legal existence
     
  • Governed by The Indian Companies Act, 1956
     
  • Minimum of 7 members, no upper limit
     
  • Collects capital via shares
     
  • Shares are freely transferable, without any prior notice to the company
     
  • Liability of a member of a company is limited to the face value of the shares he/she owns.
     
  • Shareholders do not own management rights. This ensures separation of ownership and management. Power of decision making given to Board of Directors.
     
  • Existence of company not threatened by insolvency, death of its shareholders.
     

Advantages

Disadvantages

Continuity of existence

 

Larger amount of capital

 

Unity of direction

May be subject to higher regulation than other business forms

Efficient management

 

Limited liability