A separate legal business entity which offers its shares to be traded on the stock exchange for the general public.
A company must have a minimum of seven members but there is no limit as regards the maximum number.
Ordinary directors are also referred to as simple director who attend board meeting of a company and participate in the matters put before the board. These directors are neither whole time directors nor managing directors.
According to Sec.2 (54) of the Indian Companies Act “managing director” means a director who, by virtue of the articles of a company or an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called.
A whole-time executive director includes a director in the whole-time employment of the company.
The Board Meeting may be held at a time when a director is, absent for a period of more than three months from the state and in such a situation, an ‘alternate director’ is appointed. The Board of Directors can appoint the additional director in the absence of a director if so authorized by articles or by a resolution passed by the company in general meeting. The alternate director shall work until the original director return or up to the period permitted to the original director.
Any director possessing professional qualifications and do not have any pecuniary interest in the company are called as “professional directors”.
An independent director is a director other than a Managing Director or Whole Time Director or Nominee Director.
The banks and financial institutions which grants loans to a company generally impose a condition as to appointment of their representative on the board of the concerned company. These nominated persons are called as nominee directors.
Public limited companies are headed by a board of directors. The composition of the board of directors is set out in the company’s articles of association.
Normally it comprises a minimum number of two members and a maximum of 12.
These are elected from the shareholders by the shareholders during the annual general meeting. They act as the representatives of the shareholders in the management of the company.
Shareholder liability for the losses of the company is limited to their share contribution only. This is what makes it a separate legal entity from its shareholders.
The business can be sued on its own and not involve its shareholders. The company does not belong to any person since one person can own only a part of it.
A public limited company has a minimum number of seven shareholders or members and a limitless number of members. It can have as many shareholders as its share capital can accommodate.
Shares of a public limited company are bought and sold in a stock exchange market. They are freely transferable between its members and people trading in the stock exchange.
A public limited company is not affected by the death of one of its shareholders, but her shares are transferred to the next of kin and the company continues to run its business as usual.
In the case of a director’s death, an election is held to replace the deceased director.
Public limited companies are strictly regulated and are required by law to publish their complete financial statements annually.
This ensures that they reveal their true financial position to their owners and potential investors so that they can determine the true worth of its shares.
Public limited companies enjoy an increased ability to raise capital since they can issue shares to the public through the stock market.
They can also raise additional capital by Issuing debentures and bonds through the same market from the public. Debentures and bonds are unsecured debts Issued to a company on the strength of its integrity and financial performance.
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