PUBLIC LIMITED COMPANY
A public limited company is a type of company that offers the public to subscribe for its shares thus providing flexibility in transfer of shares . A public limited company supersedes all other forms of business in all aspects.
A Public Limited Company is a creation of law and can be incorporated as per the law and provisions contained in The Companies act 2013 and the rules made thereunder. Any seven-person can start Public Limited Company with no limitation to the number of shareholders in the company. This form of business is suitable for large scale of business where the capital requirement is very high and the company is willing to obtain money from the public at large.
Advantages of Public Limited Company:
- Lower risk: As the number of shareholders is quite large, the risk borne by each shareholder is considerably low.
- Better Management: Since investing in PLC means catering to the interests of public at large, the top management will always try and be instrumental in improving its activities by employing professionals and experts. Thus managing its operations in a better manner.
- Better Promotion: Very often one sees an offer for subscription for the shares of a Public limited company, and thus is directly attracted to not only the shares of the company but also to the products and services provided.
- Capital: Raising capital is much easier for a public limited company through public subscription as well as stock market. Easy funding and that too in gigantic volumes is a characteristic that only PLCs enjoy.
- Public image: Public limited companies generally have a better image in the eyes of society, as compared to other forms.
- Democratic in nature: The directors could not dictate the decisions in the company as the rights in decision making process also vest in the hands of shareholders. Thus democracy is maintained well.
- Greater credibility: Banks and other financial institutions easily give loans to PLCs due to its high credibility.
Disadvantages of Public Limited Companies:
- Heavy Compliance: Public Limited Companies has to undergo too many legal formalities. Too much of legal formalities further lead to delay in every decision of the Public Limited Company.
- Controls and regulations: Public Limited Companies are governed by large no of Acts, rules & regulations. Higher is the external degree of control on the internals and lesser the autonomy rests in the hands of directors.
- Inflexibility: Due to high degree of external control Rapid decisions could not be taken in a Public Limited Company, thus imparting rigidity in decision making to the company.
- Lack of secrecy: You will have to maintain transparency in operations and involve the general public in your decisions. Thus even business secrets are not secrets.
- Suitability: Public Limited Company are not suitable for all types of business activities.
- High Cost: Starting up a Public Limited Company requires huge cost, time, and effort.