A Public Limited Company is registered under The Companies Act 2013 having limited liability and is listed on a recognized stock exchange. A Public Limited Company offers shares to the general public through IPO’s or FPO’s and can be bought and sold in the stock markets. A Public Limited Company operates as a separate legal entity from its owners.
The main characteristics of a Public Limited Company are as follows –
As per the provisions of the Companies Act, 2013 a public limited company should have minimum of 3 directors and there is no restriction on the maximum number of directors the company can have.
The minimum number of shareholders required to start a public company is seven while there is no limit to maximum number of shareholders.
The issue of prospectus or statement is mandatory in case of public company. A prospectus is a comprehensive statement of the affairs of the company.
In a public limited company, the liability of each shareholder is limited to the amounts invested by them and they are not responsible for any losses or debts of the company. However the shareholders would still be held responsible for their own illegal actions.
Shares of a public limited company are listed on a recognized stock exchange and traded publicly on the Stock Exchange. The shares of a public company are freely transferable.
The public company will require a certificate of commencement post incorporation to begin its operation.
It must constitute an Audit Committee of the Board. The primary purpose of a company’s audit committee is to provide oversight of the financial reporting process, the audit process, the company’s system of internal controls and compliance with laws and regulations.