A Public Limited Company (PLC) is a business structure that offers shares to the public and is listed on a stock exchange. This structure provides various benefits, such as access to capital and credibility, but it also comes with legal complexities and regulatory burdens.

This guide provides a detailed analysis of the advantages and disadvantages of a Public Limited Company to help entrepreneurs determine whether this business model is the right fit.

What is a Public Limited Company?

A Public Limited Company (PLC) is a corporate entity registered under the Companies Act, 2013 that:

✔️ Has limited liability for its shareholders.
✔️ Can issue shares to the public via an Initial Public Offering (IPO).
✔️ Requires a minimum of 7 shareholders and 3 directors.
✔️ Must adhere to strict SEBI and corporate governance norms.

This structure is generally preferred by large businesses, corporations, and high-growth startups looking for external funding.

Advantages of a Public Limited Company

1️⃣ Access to Large-Scale Capital

✔️ A Public Limited Company can raise unlimited capital by issuing shares to the public.
✔️ The company can attract institutional investors, venture capitalists, and foreign investors.
✔️ Additional funds can be raised through debentures, bonds, and public deposits.

📌 Example: Companies like Reliance Industries and Tata Motors raised billions through IPOs.

2️⃣ Enhanced Credibility and Brand Image

✔️ Being listed on a stock exchange (NSE/BSE) increases business reputation.
✔️ Public Limited Companies gain trust from customers, suppliers, and financial institutions.
✔️ Helps in securing business contracts and government tenders.

📌 Example: Listed companies like Infosys and TCS attract global investors due to credibility.

3️⃣ Liquidity for Shareholders

✔️ Investors can buy and sell shares in the stock market.
✔️ Shareholders can exit anytime without restrictions.
✔️ Promoters can partially sell stakes to monetize investments.

📌 Example: Zomato’s IPO allowed early investors to exit profitably.

4️⃣ Limited Liability Protection

✔️ Shareholders’ personal assets are not affected by company losses.
✔️ Liability is limited to the amount invested in shares.

📌 Example: Even if a PLC incurs huge debts, shareholders do not have to repay them personally.

5️⃣ Business Continuity & Perpetual Succession

✔️ The company remains operational even if directors or shareholders change.
✔️ No dissolution occurs due to the death or resignation of stakeholders.

📌 Example: Infosys, Wipro, and HDFC Bank have survived leadership changes without impact.

6️⃣ Employee Stock Ownership Plan (ESOPs)

✔️ Companies can offer shares to employees to retain top talent.
✔️ Helps in motivation, loyalty, and long-term commitment.

📌 Example: Flipkart and Paytm attracted employees with ESOPs before going public.

Disadvantages of a Public Limited Company

1️⃣ Heavy Regulatory & Compliance Burden

❌ Public Limited Companies must comply with SEBI, RBI, MCA, and stock exchange regulations.
❌ Mandatory disclosures include financial reports, governance policies, and shareholder meetings.
❌ Quarterly audits and compliance filings add to administrative workload.

📌 Example: Yes Bank faced SEBI scrutiny for governance lapses.

2️⃣ Loss of Control by Founders

❌ Promoters must dilute their stake to raise public capital.
❌ Investors and institutional shareholders gain decision-making powers.
❌ Risk of hostile takeovers if ownership is diluted too much.

📌 Example: Mindtree was taken over by L&T due to shareholder majority changes.

3️⃣ Expensive and Time-Consuming Process

❌ The cost of IPO listing, legal compliance, and regulatory approvals can be high.
❌ The company must invest in merchant bankers, financial advisors, and legal experts.
❌ Marketing and IPO promotion expenses can reach ₹5 Crore – ₹50 Crore.

📌 Example: LIC’s IPO in 2022 cost over ₹800 Crore in promotional expenses.

4️⃣ Risk of Market Volatility

❌ Share prices fluctuate due to market trends, economic conditions, and investor sentiment.
❌ Company reputation is affected by negative stock performance.

📌 Example: Paytm’s stock fell 60% post-IPO, affecting investor trust.

5️⃣ Mandatory Public Disclosures

❌ Companies must disclose financials, board decisions, and management reports.
❌ Loss of business confidentiality and exposure to competitors.

📌 Example: Tata Motors’ financial losses were public knowledge, impacting stock value.

Comparison: Public Limited Company vs Private Limited Company

📌 Conclusion: Public Limited Companies have higher growth potential but require heavy compliance.

Who Should Choose a Public Limited Company?

✅ Ideal For:
✔️ Businesses planning large-scale expansion.
✔️ Companies looking for public investment & IPO.
✔️ Firms that require high credibility & investor trust.

❌ Not Suitable For:
❌ Small businesses or startups with limited operations.
❌ Entrepreneurs who want full control over the company.

Conclusion

A Public Limited Company provides access to unlimited capital, enhanced credibility, and liquidity for shareholders. However, it comes with high regulatory burdens, compliance costs, and risks of ownership dilution.

If you are planning to register a Public Limited Company or list it on the stock exchange, expert guidance is crucial.

💡 ASK ASSOCIATES provides complete Public Limited Company registration, compliance, and IPO listing assistance to ensure a smooth and hassle-free process.

📞 Contact ASK ASSOCIATES today for expert PLC registration and compliance services!