A Public Limited Company is one where minimum number of members is seven and no limit on the maximum number of members. It is a form of separate legal entity from its owners. It is a Company which can get list its shares on public bourses which may be purchased by the public and trade freely on the open market.
1. The liability of its members is limited to the extent of share capital contributed.
2. The shares allotted to its members are freely transferable between them.
3. It enjoys continuity of existence i.e. it continues to exist even if all its members die.
4. Open invitation to public to subscribe to its shares is allowed.
5. A public company is required to have at least three directors.
1. Limited Liability: Shareholder liability for the losses of the company is limited to their share contribution only. It is a separate legal entity from its shareholders. The business can be sued on its own and not involve its shareholders.
2. Members: A public limited company has a minimum number of seven shareholders or members and a limitless number of members. It can have as many shareholders as its share capital can accommodate.
3. Minimum Capital Requirement: There is no minimum capital requirement for formation of Public Limited Company.
4. Transferable shares: If listed then shares of a public limited company are bought and sold in a stock exchange market. They are freely transferable between its members and people trading in the stock exchange.
5. Uninterrupted Existence: A public limited company is not affected by death of one of its shareholders, and the company continues to run its business as usual. In the case of a director's death, the vacancy can also be filled in accordance with the provisions given under the Companies Act, 2013.
6. Foreign Direct Investment: Public Company is eligible to receive Foreign Direct Investment in terms of RBI Guidelines and FEMA Provisions.