From the Desk of CA Navin Surana…

Advantages of Public Limited Registrations

A Public limited Company has many advantages over other business structures as elaborated below.

 Limited Liability Protection to director’s personal assets:

Many times business need to borrow money and take high investment decisions. Public Ltd. Company is
the best option for entrepreneurs with larger investment requirements. In case of normal Partnerships,
Partners personal savings and property would be at risk incase business is not able to repay its loans or
business goes into loss. In a Public limited company, only investment in shares of the business is lost,
personal assets of the directors/shareholders are safe.

 Better image and credibility in the market:

Public limited company is popular and well known business structure. Corporate Customers, Vendors and
Govt. Agencies prefer to deal with Public Limited Company instead of proprietorship or normal partnerships.

 Easy to raise funds and loans:

Public Limited Company can list itself in various stock exchanges in India and raise capital from stock
market. Limited company also enjoys wide options to raise funds through bank loans, general public and
Institutional investors.

 Favorite business structure for investors:

Investors like to invest in Public Limited companies as it is well structured and transparent business
structure.

 Easy transfer of shares:

Most important it is very easy to exit from a Public limited company, only shares of the company need to
be handed over to the purchaser along with the signed share transfer forms.

 Most suitable for heavy investment:

Public Company is the best choice for businesses involving heavy investment.

 Dual relationship & Tax management:

It is possible for a Public Limited company to make a valid contract with any of its shareholders/directors. It
is also possible for a person to be in control of a company and at the same time be in its employment. Thus,
a person can at the same time be a shareholder, director, creditor and employee of the company.

 As a director he can receive remuneration.

 As a shareholder he can receive dividend.
 As a lessor he can receive lease rent.
 As a creditor he can lend money and earn interest.
 As a supplier he can supply goods from his/his family business.

Remuneration, Rent & Interest are charged as expenses to the company and reduces the net income &
ultimately reduces the income tax.