They are freely transferable between its members and people trading in the stock exchange. Shares of a public limited company are bought and sold in a stock exchange market. It can have as many shareholders as its share capital can accommodate. Number of MembersĪ public limited company has a minimum number of seven shareholders or members and a limitless number of members. The company does not belong to any person since one person can own only a part of it. The business can be sued on its own and not involve its shareholders. This is what makes it a separate legal entity from its shareholders. Shareholder liability for the losses of the company is limited to their share contribution only. They act as the representatives of the shareholders in the management of the company. These are elected from the shareholders by the shareholders during the annual general meeting. Normally it comprises a minimum number of two members and a maximum of 12. The composition of the board of directors is set out in the company’s articles of association. Public limited companies are headed by a board of directors. So, some advantages of a public limited company are Shareholders of a public limited company are limited to potentially lose only the amount they have paid for the shares they own. Shares of a public limited company are listed and traded at a stock exchange market freely. Advantages of Public Limited CompanyĪ public limited company is a form of business organization that operates as a separate legal entity from its owners. This ensures the unity of direction in management.Īs a company is an independent legal person, its existence is not affected by the death, retirement, or insolvency of any of its shareholders. The power of decision making in a company is vested in the Board of Directors, and all policy decisions are taken at the Board level by the majority rule. This ensures the separation of ownership from management. The shareholders of a company do not have the right to participate in the day-to-day management of the business of a company.Once he has paid the whole of the face value, he has no obligation to contribute anything to pay off the creditors of the company. The liability of a member of a company is limited to the face value of the shares he owns.The shares of a company are freely transferable and that too without the prior consent of other shareholders or subsequent notice to the company.The amount so collected is called the share capital. The company collects Its capital by the sale of its shares and those who buy the shares are called the members.A company must have a minimum of seven members but there is no limit as regards the maximum number.Its formation, working and it’s winding up all its activities are strictly governed by rules, laws, and regulations.The company has separate legal existence apart from its members who compose it.Public limited companies are listed on the stock exchange where it’s share/stocks are traded publicly.
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