What is a Public Limited Company? Meaning, features and more.

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Small unit businesses can be comfortably handled with sole proprietorship or partnership firm but if the business is big or the business is growing then we will need more resources and as the business grows the risk also increases. To solve this problem the concept of Private Limited was established but the problem is that Private Limited Company is not suitable for extra-large business, and it prohibits transferring shares to a large number of people and raising capital from them. To solve this problem the concept of Public Limited Company was established. The Companies Act, 2013 regulates public limited companies.

What is a Public Limited Company?

Meaning of Public Limited Company

Public Limited Company means a company which is registered under the Companies Act and a large number of members are the owners of that company.

In simple language, Public Limited Company means a publicly owned company. It has a minimum of 7 members and there is no limit on the maximum number of members.

Definition of Public Limited Company

According to Section 2(71) of the Companies Act, 2013 – “Public Company means a company which—

(a) is not a private company;
(b) has a minimum paid-up share capital of five lakh rupees or such higher paid-up share capital, as may be prescribed:

Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles;”

Note: The words “of five lakh rupees or such higher paid-up share capital,” omitted by Act 21 of 2015, S. 2 (w.e.f. 29-5-2015).

Features of Public Limited Company

Following are the features of Public Limited Company:

1. Member:

Company is an association of members. A public limited company has a minimum of 7 members and there is no limit on the maximum number of members.

Minimum – 7
Maximum – No Limit

2. Separate Legal Entity:

Separate legal entity is the biggest feature of Public Limited Company because under it the company gets separated from its owner and becomes a separate legal entity. According to this, the company and its owner are two different persons.

3. Limited Liability:

Members of a public limited company enjoy limited liability facilities. Under limited liability the member is liable only to the extent of his share.

4. Perpetual Succession:

Perpetual succession means continuity, according to which members may come and go but the company will continue. The company cannot be closed unless it is closed.

5. Ability to Sue:

When the business is registered under the Companies Act, the business gets a separate legal entity under the law, under which the company can sue anyone in its name.

6. Capacity of Ownership:

When the business is registered under the Companies Act, the business gets a separate legal entity under the law, under which the company can buy and sell property in its own name.

7. Name:

A business registered under the concept of Public Limited Company in the Companies Act must add Limited (Ltd) after its name.

• ABC Limited (ABC Ltd.)
• XYX Limited (XYZ Ltd.)

8. Transferability of Shares:

There is no restriction on transferability of shares in a public limited company, anyone can transfer his/her share to the public at large.

Read Also:

• What is a One Person Company? Meaning, features, and more.
• What is a Private Limited Company? Meaning, features, and more.

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