Public Limited company

 A public limited company (PLC) is a corporation whose shares are publicly traded on a stock exchange. Shareholders have limited liability, responsible only up to their investment. A PLC can raise substantial capital through public offerings but faces greater scrutiny and governance standards.

Public Limited company

Key features

  • Limited liability
  • Shares traded on a stock exchange
  • Minimum share capital requirement
  • Separate legal entity
  • Subject to stringent regulatory requirements

Advantages Disadvantages
Access to capital through the sale of shares. Complex and costly setup process.
Limited liability for shareholders. Extensive regulatory compliance requirements.
Enhanced credibility and public image. Greater scrutiny and loss of privacy.
Ability to attract high-quality employees with stock options. Risk of hostile takeovers.
Perpetual succession regardless of changes in ownership. Pressure to meet short-term financial goals.
Easier to raise large amounts of capital. Dilution of control among many shareholders.
Increased transparency and accountability. Higher administrative and reporting costs.
Greater potential for expansion and growth. Mandatory disclosure of financial information.
Ability to spread risk among a larger number of shareholders. Risk of losing control to external shareholders.
Easier to merge with or acquire other companies. Potential for conflicts of interest among shareholders.

Multiple Choice Questions

Question 1: What is a public limited company (PLC)?
A) A business owned by a single individual
B) A corporation whose shares are publicly traded on a stock exchange
C) A partnership with limited partners
D) A government-owned entity
Explanation: A corporation whose shares are publicly traded on a stock exchange.
Question 2: What type of liability do shareholders in a PLC have?
A) Unlimited liability
B) Joint liability
C) Limited liability
D) No liability
Explanation: Limited liability.
Question 3: How can a PLC raise substantial capital?
A) By borrowing from banks
B) Through public offerings on the stock exchange
C) By reinvesting profits
D) Through government grants
Explanation: Through public offerings on the stock exchange.
Question 4: Which of the following is a requirement for a public limited company?
A) Minimum share capital
B) Only one director
C) No need for regulatory compliance
D) Shares not traded publicly
Explanation: Minimum share capital.
Question 5: What distinguishes a PLC from a private limited company (Ltd)?
A) Limited liability
B) Shares traded on a stock exchange
C) Separate legal entity
D) Small number of shareholders
Explanation: Shares traded on a stock exchange.

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