What is a Public Limited Company?
A public limited company, also referred to as a publicly held company, is a company formed by two or more individuals that offers its shares for sale to the general public. Public limited companies, also known as PLCs, are found in England and Ireland as well as other areas that observe English law. These companies maintain limited liability, meaning should the company fail, investors may only lose the amount of money which they have paid for their shares, and are not responsible for the debt of the entire company. This type of company also may have an unlimited number of investors, unlike privately held companies, which may not.
Public limited companies face some stock exchange rules. Normally, only public limited companies may be traded on the London Stock Exchange (LSE), for example. Irish public limited companies are typically traded on the Irish Stock Exchange, though in some cases they may be found listed on the LSE as well. Public companies are normally regulated through guidelines established by the government of the country in which they operate, and they are typically required to publish their financial records for review by their investors.
Almost any individual may become a company director and form their own public limited company. England and Ireland require at least two individuals to form such a company together, while India requires a minimum of three. Each country also maintains their own standards for disqualification from becoming a company director, typically based on age and legal standing.
A public limited company must register with the Companies House, which incorporates and stores information on every public limited company in England, Ireland, Wales, and Scotland. The Companies House then issues a Certificate of Incorporation to the public limited company and requires a Memorandum of Association. This memorandum typically describes the purpose of the company and the Articles of Association, which provide the rules and regulations of the company.
Public limited companies are similar in definition and operation to an American corporation. Corporations are given legal rights by the United States government, typically from the state in which they operate. They are treated by the state as a separate entity from their share holders, protecting the share holders from financial responsibility for the entirety of the company. A corporation may be sued, but its shareholders may not be taken to court and held responsible for any actions taken by the company. Similarly, if a corporation must pay a settlement fee to those individuals bringing charges against it, that fee may come from the corporation’s assets only and not the personal property invested by the corporation’s shareholders.
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