Public Limited Company is the legal designation of a limited liability company which has offered shares to the general public and has limited liability. The Company that is being constructed by a minimum of 7 people and maximum according to the shareholders with limited liability is called the public limited company.
A public limited company is a legal description of a limited liability company. This means that the public company grants limited responsibility to the owners and management.
The features of a public limited company are discussed below:
For the formation of such a company, there are some further legal procedures even after getting the letter of incorporation and certificate of commencement. For this reason, the formation of the public limited company is quite complex and time-consuming.
- A number of members
The first and main feature of Public Limited Company is that has a minimum of 7 members and maximum limit is restricted by the number of shares. If needed, the maximum number of members can be enhanced by correcting the memorandum of association.
This type of company is obligated to published prospectus or statement in lieu of prospectus and they are required to send this copy to the registrar. However, in the case of Private Limited Companies, the public is not invited to subscribe for the shares of the company.
- Perpetual succession
The Company keeps on accessible in the eyes of law even in the case of death, insolvency, the economic failure of any of its members. This leads to the perpetual succession of the company.
- Share capital
The public limited company has than capital which refers to the fund’s arrangement by issuing shares in return for cash or other considerations. The amount of share capital of a company can change over time because each time a business sells new shares to the public in exchange for cash, the amount of that capital will increase.
- Transferability of shares
Shares of the public limited company are purchased and sold in a stock exchange market. They are freely transferable between the members and people trading in the stock exchange.
- Statutory duties
This Company is also obligated to arrange a statutory board meeting, financial statements, audit, and inspection and send statements to the registrar, etc.
- Separate logo
The Company has its own separate logo. The company is obligated to use this logo in its all types of operations and functions.
- Limited liability
Shareholders’ liability for the losses of the company is limited to their share contribution only. This makes a separate legal entity from shareholders. The business can be sued on its own and not involve its shareholders. It means that if a company faces loss under any circumstances then its shareholders are liable to sell their own assets for payment. The personal, individual assets of the shareholders are not at risk.
- Board of Directors
Public limited companies are headed by a board of directors. Normally this comprises a minimum number of three members and a maximum of 12. They are elected by the shareholders during the annual general meeting. They act as the representatives of the shareholders in the management of the company.
- Voluntary association
As it is possible to enter into a public limited company by buying its shares. This is also possible to leave anytime by transferring those shares to others. So it is fully dependent on the will of the concerned people, for which it is to be said as a voluntary organization.
- Minimum subscription
It is the amount receives by the company which is 90% of the shares issued within a certain period of time. If the company is not able to receive 90% of the amount then they cannot commence further business.
Analyzing the above-mentioned features, we get to know that it is the public limited company which falls under the definition of Joint Stock Company in a true sense. These features establish it as a real form of a Joint Stock Company.