A Public Limited Company is a company that has limited liability and is preferred for medium and large sized businesses in India if they are planning to raise funds from the general public.
Its stocks can be acquired by anyone, either privately through initial public offering (IPO) or via trades on the stock market. A Public Limited Company is strictly regulated and is required to publish its true financial health to its shareholders. Only public limited companies can have its shares listed on Indian stock exchanges such as NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).
As per the provisions of the Companies Act, 2013 to start a public limited company, a minimum of 3 directors and 7 shareholders are required and there is no restriction on the maximum number of directors.
- Paid-up Capital:
A public limited company is required to have a minimum paid-up capital of Rs 5 lakh or such higher amount as prescribed under the act.
- Limited Liability:
The liability of each shareholder is limited. In simple words, a shareholder of a public limited company isn’t personally responsible for any loss or debts of the company for any amount greater than the amount invested by them.
There is a requirement under the Act for public limited companies to issue a prospectus. A prospectus is a comprehensive statement of the affairs of the company issued by a public limited company for its public. However, there are no such provisions for Private Limited Companies because private limited companies cannot invite the public to subscribe for their shares.
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