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Public Limited Company PDF

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57 views2 pages

Public Limited Company PDF

Uploaded by

amnamunir126
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PUBLIC LIMITED COMPANY

# Public Limited Company


# Definition:
A public limited company (PLC) is a type of business structure that can issue shares to the general
public and is listed on a stock exchange. It has its own legal identity, separate from its owners.

# Characteristics:
*1. Limited Liability:*
- Shareholders have limited liability, protecting their personal assets.

*2. Separate Legal Entity:*


- The company has its own legal identity, allowing it to own assets, enter contracts, and sue or be sued.

*3. Public Shareholding:*


- Shares can be bought and sold by the general public on a stock exchange.

*4. Management:*
- The company is managed by directors, who make strategic decisions.

# Advantages:
*1. Access to Capital:*
- The company can raise large amounts of capital by issuing shares to the public.

*2. Increased Visibility:*


- Being listed on a stock exchange can increase the company's visibility and credibility.

*3. Perpetual Existence:*


- The company continues to exist even if ownership changes.

*4. Professional Image:*


- A public limited company can project a more professional image.

# Disadvantages:
*1. Complex Setup:*
- Forming a public limited company requires more formalities and paperwork.

*2. Regulatory Compliance:*


- The company must comply with strict laws and regulations, including financial disclosure
requirements.

*3. Loss of Control:*


- Shareholders may have limited control over company decisions.

*4. High Costs:*


- Listing on a stock exchange and maintaining a public limited company can be costly.
# Suitability:
A public limited company is suitable for:

*1. Large Businesses:*


- Businesses that require significant capital investment.

*2. Established Businesses:*


- Businesses with a proven track record and strong financials.

*3. Businesses Seeking High Profile:*


- Businesses that want to increase their visibility and credibility.

# Examples:
1. Multinational corporations
2. Large retail companies
3. Financial institutions
4. Technology companies

# Key Concepts:
1. *Initial Public Offering (IPO)*: The process of issuing shares to the public for the first time.
2. *Stock Exchange Listing*: The process of listing the company's shares on a stock exchange.
3. *Corporate Governance*: The system of rules, practices, and processes by which the company is
directed and controlled.

# Importance:
Understanding public limited companies is essential for:

1. *Business ownership*: Recognizing the benefits and drawbacks of this business structure.
2. *Investing*: Understanding the opportunities and risks of investing in public limited companies.
3. *Business studies*: Analyzing the characteristics and suitability of public limited companies.

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