10 characteristics of a limited company
A corporation is a legal entity created by a group of people who come together to carry out a business activity. This company is characterized by having a share capital divided into shares, which can be purchased by anyone interested in investing in the company. In addition, it has a corporate governance structure made up of a Board of Directors, which makes strategic decisions, and a Shareholders' Meeting, which is the highest authority of the company.
The main advantage of a public limited company is that it allows its shareholders to limit their liability in the event of bankruptcy or liquidation of the company. Liability is limited to the money that each shareholder has invested in the company and they are not required to cover debts with their personal assets. On the other hand, a public limited company has greater operational and financial flexibility, since it can increase its capital through the issuance of new shares or by obtaining bank loans.
However, a limited company also has some disadvantages. The first is that its operation is subject to a series of regulations and rules that can limit the decision-making and flexibility of the company. In addition, the creation of a public limited company may require a high level of initial investment and the management costs may be higher than in other types of companies. Therefore, before creating a corporation, it is important to carefully assess the risks and benefits of the process and consult an expert in business law.
List of the 10 most important characteristics of a limited company
- Social capital: It is the money with which the corporation is created and is represented by shares.
- Limited Liability: Shareholders are not personally responsible for the company's debts.
- Governing bodies: The corporation has a shareholders' meeting, a board of directors, and an administrator or general manager.
- Actions: They are securities that represent a part of the share capital of the corporation and can be bought and sold in the stock market.
- Transparency: Public limited companies are required to keep a minute book and a shareholder registry book, which makes it possible to know their structure and decisions.
- Flexibility: The law allows great flexibility in the internal organization of the corporation, which makes it suitable for companies of different sizes and lines of business.
- Share composition: The public limited company can have an unlimited number of shareholders, which facilitates the integration of the capital of several people.
- Independence: The company has its own legal personality and is independent from its shareholders, so it can carry out operations by itself.
- Corporate governance: The corporation must have corporate governance policies and practices to guarantee ethics and transparency in its actions.
- Continuity: The corporation can have a perpetual life, as long as the legal and tax requirements are met.
Final comments about a limited company
In conclusion, the most important aspects of a corporation are its structure and its ability to raise capital through the issuance of shares. The public limited company is made up of three fundamental elements: the board of directors, the shareholders' meeting and the management. In addition, this business structure is characterized by limited autonomy for its members, which facilitates faster and more efficient decision-making.
On the other hand, another relevant factor of the public limited company is its financing capacity through the issuance of shares. Being open to the public and having the possibility of being listed on the stock market, this form of company has a greater capacity to obtain external financing compared to other types of company. In summary, the public limited company is a business entity with a solid structure and a great capacity for expansion, which makes it an interesting option for those seeking to invest in the market.
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ENCICLOPEDIA DE CARACTERÍSTICAS (2023) 10 characteristics of a limited company, en 10caracteristicas.com. https://10caracteristicas.com/en/10-characteristics-of-a-limited-company/ (Consultado el: 22-09-2023)
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