Characteristics of Public Company

Characteristics of Public Company

In this article we would explain some important characteristics of public company. General public funds are invested in the public company. 

Important Characteristics of Public Company

Some important characteristics of public company are listed in terms of limited liability, role of directors, number of shares, trading of shares, strictly regulated etc.

1.   Limited Liability

Shareholders or equity holders of the public company have limited liability in case of liquidation. This characteristics is common both in public and private companies.

2.   Role of Directors

Another important characteristic of Public company is its management. The affairs of public company are run by the board of directors. The directors or board of directors are appointed by the shareholder in the general meeting.

3.   Number of Shareholders

In public company there are large numbers of shareholders. If the share capital is 1,000,000 and each share has a face value of 10, then maximum possible numbers of shareholder are 100,000 (1,000,000/10). It is to remember that each share holder not necessarily required purchase/hold one share.

4.   Share are publicly traded

Another main characteristics of public company is trading of its shares . The Shares of public company are publicly traded in stock exchange. Thus everyone can buy shares in public company through brokers. Share buying procedure has been explained in my other article.

5.   Strictly Regulated

Public company is subject to many regulation and public disclosures. The need of public discourse is high due to the public investment in these companies.

6.   Disclosure of Information

Public company is liable to disclose many kind of information to the general public. This information includes Change in office, annual reports, appointment of directors etc.

7.   List of characteristics of public company

Some important characteristics of public company are listed below

a.    It has limited liability.

b.    It has large number of shareholders.

c.    It is has many regulations & disclosure requirements.

d.    Its shares are publicly traded.

e.    Public company is strictly regulated.