A public limited company is owned by shareholders who elect directors to govern the company. Shares can be sold publicly or privately, and shareholders have limited liability. They can make money from selling shares or collecting dividends and have input into company policy through voting. The number of shares determines the number of votes a shareholder has, and a person with over 50% of shares has a controlling interest.
A public limited company is a company whose ownership is divided into parts called shares. The buyers of these shares, known as stockholders or stockholders, elect the directors who govern the company. All corporations are for-profit organizations.
To form a public company, a corporation files articles of incorporation or a corporate charter. These documents register the company and provide basic information about the company, such as its address and type of business. In forming a public company, the company will also need to determine the amount and type of shares that will be issued.
Once the shares are issued, the shares can be sold to the shareholders. In some cases, articles of association or bylaws may impose restrictions under which shareholders can sell their shares. While there may be restrictions on the resale of stock, shares are considered to be the property of the shareholder and do not belong to the company itself.
In general, a public limited company has limited liability. In that case, the shareholders are only financially responsible for the amount of money invested in the company, which they will lose if the company goes bankrupt. If the company is in debt beyond the value of its assets, however, the shareholders are not liable.
A public limited company can be held publicly or privately. In some cases, a privately held company may impose restrictions under which shares can be sold. Closely held companies, with few shareholders, often apply such restrictions.
If a company is publicly held, the shares are available for purchase by any party. These companies are often registered on a stock exchange where the shares can be traded widely. Publicly traded companies can make money by selling more shares. They can also use the profits to buy shares in the company from shareholders.
Shareholders can make money from their shares by selling them for profit or by collecting dividends. If the value of the shares has increased, the shareholder may choose to sell them. Although the buyer is paying more than the seller for the stock, he is buying the same percentage of the company that the seller had.
Dividends are payments made by a corporation to its shareholders. Dividends generally come from company profits and can be paid in cash or in multiple shares.
Shareholders are entitled to receive input into company policy. This may include decisions relating to the election of board members, the purchase of other companies and the making of certain investments. Shareholders vote on these decisions. In some companies, shareholders receive recommendations from company management on how they should vote.
The number of shares a shareholder owns in a public company determines the number of votes assigned to that shareholder. If a person owns more than 50% of a company, he is said to have a controlling interest in the company. Since his voting power is more than all other shareholders combined, he has considerable influence in the management of the company.
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