Characteristics of Public Limited Companies

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A limited company is an independent legal entity with legal capacity. It is a corporation whose capital stock (shares) is limited, thus the liability of shareholders is limited and the shares are transferable.

This type of a company is common in the United Kingdom and other Commonwealth countries. In general, the establishment of a public limited company involves a minimum of two directors, and can take up such a position as long as they are not disqualified by a court of law, under the age of sixteen or over the age of seventy.

A private company is limited by shares, and can be a small or medium-sized business, and its difference with the public limited company is that the private company is limited by shares, no shares are offered to the public or traded on the exchange.

The private company is also limited by guarantee, and is formed in derogation of the usual form of a corporation and not share capital. But the shareholders can create a guarantee in the event of insolvency of the company. It is a special form, which often occurs in non-profit companies, that act as a legal entity.
The members should concur on the issue of acquiring some, or all of the shares upon registration of the company. On the other hand, the memorandum of association indicates the names of the individuals agreeing to take up the shares, and the amount of shares they are getting.

Prior to commencement of business the public limited company should comply with the minimum share capital requirements, part of which must be paid up. A quarter of the nominal value of every assigned share should be paid up, combined with the entire premiums applicable.

A business entity has the right to raise its authorised share capital through an ordinary resolution unless its articles of association stipulate otherwise. The public limited company is the usual form for larger companies, which are often publicly traded companies. Because they can offer their shares to the public or those traded on the stock exchange; they are subject to stricter reporting and disclosure requirements.

Additionally, they need a company secretary, and the name of the company must have a distinctive addition, that is, public limited company or the abbreviation PLC.

The public limited company is permitted to issue various types of shares, and the shares fall into four categories. And these include bearer shares (legally denote company ownership), cumulative preference shares (unpaid dividends carried over), ordinary shares (ordinary = no special rights or restrictions). Preference shares (preferential annual dividend payments), while the redeemable shares are issued with a buy back agreement.



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