The evolution of businesses began from sole propriety and has now reached higher and more convenient types which make the business legally easy to handle and run for a longer period of time. Public Limited Companies, better known as PLCs came to light in this process of business evolvement. These types of companies offer their shares to the general public, unlike Private Limited Companies that only sell shares among friends and family members. There are several characteristics of these companies that make them stand out from other types of business. Following features shows why you must invest in a PLC.
Who are the board of directors?
The control of the PLC is held by the board of directors. The particulars regarding this matter are usually mentioned on the articles of association and is should be within the boundary of 2 – 12 directors. At the Annual General Meeting, better known as the AGM, this board of directors will be elected by the shareholders themselves. The primary objective of electing this board is for them to represent the company on behalf all the shareholders in business matters.
An advantage that you can gain by investing in a Public Limited Company is that there will be no need for you to hold liability for anything in addition to the share value that you hold. In other words, you will only be liable only for your share contribution. This is one of the main features that make the company a legal entity which is separate from the business. An interesting fact to keep in mind is that, due to this separate legal entity, even if the business is sued, the shareholders are not for the business stands alone as a person.
If a company expects to increase their capital in a larger scale, converting into a PLC is indeed the better option. Why? As mentioned earlier, these types of companies are allowed to issue shares to the general public, which in return rewards them with a significant increase in the capital. If you need to raise additional capital for the company, then you can do that by raising bonds and debentures; these can be issues to the general public as well.
Shares and lifespan
A special feature of PLCs is that the shares you buy can be freely transferrable to another shareholder or to a person that carries out trading activities in the stock market. As this company stands on its own and has the ability to issue shares to the general public and transfer them freely, a death or parting of a shareholder will not affect the continuity of the company. In every way, PLC is a winner!