Introduction
A public limited company is a business organisation which is said to be a separate legal entity from its owners. A public limited company is owned and also formed by the shareholders. Its shares are traded and listed at the stock exchange market freely. The stocks of the company can be taken or acquired through initial public offering or via trades in the stock market. This is regulated and financial health has to be truly published to the shareholders.. A public limited company is limited by shares where the person who is only liable for their individual contributions are the shareholders
Advantages of PLC :
- Capital is raised through public issue of shares:
The most important advantage is that a public limited company can raise share capital and list the company on a recognised stock exchange. It has the ability to sell the shares and stocks to the public and anyone can invest the money. Besides that, any capital which gets invested is obviously larger than private companies. As the public limited company is listed on stock exchange which is recognised, it can attract investment from different hedge funds. Mutual funds and institutional traders also get attracted.
- To widen the base of the shareholder and spread risk
If shares are offered to the general public, it can spread the risk of company ownership amongst different shareholders. By seeing this, the early investors of the company can sell some of their own shares with a profit. They can also retain a substantial stake in the company. If capital is obtained from different investors, it will have certain advantages to rely on angel investors. Such angel investors provide capital and enterprise where the founders sometimes are not comfortable with the influence over the direction of the company.
- Other finance opportunities:
If a public limited company looks at potential sources of finance, a public limited company is always in a better place. As it maintains a stock exchange listing, it improves a company’s credit worthiness. This issues corporate debt. Banks and other financial institutions extend finance to a public limited company and negotiate favourable interest rates and repayment.
- Growth and Expansion Opportunities:
Raising finance is dealing with serving the business. More finance is easily available on better terms.
- New projects, new products and new Markets are pursued.
- Capital expenditure is supported and business is enhanced
- Acquisitions are made in either case or by providing shares to the different shareholders to target business.
- Researching fund and development
- To pay off the existing debt and replace it with new debt to grow originally.
- Prestigious profile and confidence:
Having plc at the name of any public limited company is quite standing and prestigious.
- The public limited company operates under a stricter legal regime and has higher share capital requirements.
- It has greater transparency and indirect endorsement on a recognised exchange.
- Transferability of shares : Any shareholder of a public limited company can transfer the company shares or stocks to the public. There are no such restrictions of share transfer or else these shareholders can also invite the public to subscribe to all the shares which need to be given to the public.
Perpetual Succession: The most interesting thing is that no public limited company can come to an end. It does not mean that the members or shareholders cannot change. Any member, director or shareholders can come and go but the company never stops existing. Any important member if he or she dies, then also the company does not come to an end. As long as the company is not closed or liquidated, it never comes to an end.
Aishwarya Says:
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