Public Company is a form of business registration which is very popular. All companies listed on stock exhange are public limited companies. The shares of public limited company are more actively traded on stock exchange which is not possible for the private limited company registration. The shareholding of the public limited company is more widely held as compared to privated limited company.

Public Company has more access to raise money from general public and are required to follow more goverance and compliance requirement. Many public companies started as private companies but after gaining access to a wider pool to funds to finance their business operations. Any private limited company registration which is subsidiary of public company is deemed to public company. The features, advantages and disadvantages of public company is as follows:

Features of Public Company

• Liability of shareholders are limited to unpaid share anmount and liability of director is limited
• Public Limited company is going concern forever unless wind-up
• More compliance as comapred to private limted regsitration
• Share of Public Limited company can easily transferable

Advantages of Public Company

• The capital raised by the public company through shares issued to the general public is usually more than that of the Private Company. There will not be any problem regarding finances.
• Creditworthiness is perceived better in public companies, so it becomes comparatively easier for the public company to get financial help from banks or other institutions.
• Brand Recognition will get build as the reach of the public company is extended to the general public.
• The ability to raise larger sums of capital means that the company is in better positions to finance multiple projects as comapred to private company registration. This is a strategically advantageous position for the company in the market

Disadvantages of Public Company

• The Public Company must prepare their books of accounts in accordance with the Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). This is a kind of disadvantage as lots of formalities need to be fulfilled and strict adherence to these rules must be followed.
• Public Companies are vulnerable to the government’s scrutiny, regulatory agencies, and the public. The government must meet all the regulations imposed by the government.
• Shareholders are entitled to all the documents and also the transparency of all the financial statements needs to be maintained which becomes a little bit difficult.
• Accounts must be audited and public companies must publicly file full accounts rather than abbreviated ones. In turn, it means public companies receive more scrutiny most probably from financial media.

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CA Sundram Gupta is a Chartered Accountant and forensic auditor having 10 years of experience in the field of Auditing, GST, Income tax and Accounting. He has given consultation to distinct industries over these years.

Read more-Certificate of Incorporation for Private Limited Company