What are the Advantages of a Public Company?

1. Larger funds:

The capital of a public company is generally raised from the public. People belonging to all walks of life throughout the country can buy shares which are priced at low levels.

Moreover, there is no restriction on the number of members in a public company. Credit standing of a public company is better than that of a private company. Therefore, it can raise huge financial resources.

2. Limited liability:

The liability of members of a public company is limited. They have to face limited risk.

3. Transferability of shares:

The shares of a public company are freely transferable. This makes investment in the shares liquid and an investor is not bound to remain with the company.

4. Democratic management:

Management of a company is not confined to a few persons. Shareholders can elect and remove directors. They exercise control over management in general meetings of the company.

Minority shareholders are provided protection under the Companies Act. Against oppression and mismanagement. Thus, the management of a public company is democratic.

5. Scope for expansion:

There is unlimited scope for growth and expansion of business. New shares can be used to raise additional capital. Experts can be employed to manage the increasing business activities. Therefore, a public company can avail of the economies of large scale operations.

6. Public confidence:

A public company enjoys greater confidence of public because its accounts are published and it operates under statutory regulation and control. Shares of a public company are traded on stock exchanges. Any shareholder can find out the value of his investment from stock exchange quotations.

7. Growth of capital market:

A public limited company facilitates the growth of a healthy capital market primary and secondary markets for securities have developed largely due to the shares and debentures issued by public companies. Public companies also contribute to the growth of financial institutions and banks.