Public Limited Company: Meaning, Purpose, and Key Insights

A public limited company (PLC) is not just a business but a platform for public ownership and large-scale investment. By offering shares on stock exchanges, PLCs unlock capital and visibility that private companies cannot match. This structure demands high transparency but offers powerful growth potential. As Indonesian businesses aim higher, understanding the role and impact of PLCs is more relevant than ever. 

What is a Public Limited Company? 

A public limited company (PLC) is a type of business entity that allows its shares to be publicly offered and traded, typically on a stock exchange. Unlike private companies, PLCs can raise capital from the public by selling shares, which makes them ideal for large-scale operations. 

They must adhere to stricter regulatory requirements, including regular financial reporting and governance standards, ensuring transparency and accountability. Commonly used by firms seeking credibility and expansion, a public limited company offers opportunities and obligations, making it a significant structure in the business world. 

What is the Purpose of a Public Limited Company? 

The primary purpose of a public limited company is to generate capital by offering shares to the public. This broader access to funding enables businesses to support expansion plans, invest in innovation, and strengthen their competitive edge.  

Moreover, PLCs gain increased public trust and visibility due to their obligation to meet rigorous regulatory standards. This structure also ensures greater liquidity for shareholders, making it easier to buy and sell shares on the stock market. 

READ MORE:

• The Steps to Establishing a Private Limited Company in Indonesia
• A Guide to Establish a Holding Company in Indonesia
• A Complete Guide for Registering a Company as Foreigners

Public Limited Company vs. Private Limited Company 

While public and private limited companies offer limited liability and a structured business framework, they differ significantly in ownership, regulatory obligations, and fundraising capabilities. Here is a clear comparison: 

Feature	Public Limited Company (PLC)	Private Limited Company (Ltd)
Ownership	Shares can be owned by the public	Shares held privately by a few individuals
Share Trading	Traded publicly on a stock exchange	Not traded on public exchanges
Minimum Shareholders	At least 2 shareholders	1 or more shareholders
Disclosure Requirements	Must publish financial reports publicly	Financials are typically kept private
Regulation	Heavily regulated by government authorities	Less regulatory burden
Capital Raising	Can raise capital from public investors	Limited to private investments
Company Name Requirement	Must end with “Public Limited Company” or “PLC/Tbk”	Must end with “Private Limited” or “Ltd”

How Does a Public Limited Company Work? 

A public limited company offers its shares to the public through a recognized stock exchange, allowing it to raise significant capital from a broad investor base. In Indonesia, a PLC must comply with regulations set by the Otoritas Jasa Keuangan (OJK) and the Indonesia Stock Exchange (IDX).  

Once listed, the company must publish audited financial statements, maintain transparent corporate governance, and hold regular shareholder meetings. 

To establish a PLC in Indonesia, businesses must complete company registration and obtain a business license. These legal steps ensure compliance and build investor trust. Once operational, the PLC structure facilitates access to public funding while holding management accountable to shareholders and regulatory bodies. 

Advantages and Disadvantages of a Public Limited Company 

Understanding the pros and cons of a public limited company is important before making the transition. Here is a breakdown: 

Advantages 

• Raising Investment: Share capital from public sales provides a steady stream of income. This capital can be reinvested into the business for product launches, market expansion, or R&D enhancements. 
• Reduced Risk: Unlike private investments, which often require significant equity from a few backers, PLCs distribute ownership across many shareholders, thereby reducing individual investor influence and overall risk. 
• Developing New Networks and Business Links: Shareholders are motivated to support business success. Their involvement often leads to expanded networks, strategic partnerships, and new opportunities that facilitate growth and development. 
• Easier Access to Loans and Financing: Banks and financial institutions see PLCs as more creditworthy due to their public accountability. As a result, they often secure loans more easily and on better terms than private firms. 
• Brand Awareness and Prestige: Stock exchange listings attract public attention, enhancing brand visibility and perceived credibility. This boost can lead to higher sales, stronger supplier relationships, and improved employee retention. 

Disadvantages 

• Increased Regulation and Requirements: PLCs must adhere to stricter rules than LTDs, including having at least two directors, a qualified company secretary, and mandatory audits. These regulations increase operational complexity and cost. 
• Potential Loss of Control: Shareholders in a PLC have a say in the company’s direction. Selling over 50% of shares could result in a loss of control, including the possibility of directors being replaced by the majority stakeholders. 
• Greater Need for Transparency: Public companies must disclose full financial details annually. Poor performance reports can lead to negative media coverage and investor distrust. 
• Stock Market Vulnerability: Market perception has a significant impact on share prices. Negative press or economic shifts can devalue shares and damage the company’s reputation. 
• Vulnerable to Takeovers: Since shares are publicly traded, rival firms can acquire significant stakes and initiate hostile takeovers, thereby gaining influence or control over the company from within. 

Public Limited Company vs. Other Business Structures 

Choosing the proper business structure is a strategic decision influencing ownership, regulation, funding, and control. Here is how a public limited company (PLC) compares with private limited companies (Ltd) and limited liability partnerships (LLP) across key areas: 

Launch Your Business the Right Way with InCorp 

A public limited company provides an excellent structure for businesses that aspire to scale, enhance market credibility, and attract public investment. However, this also entails greater responsibilities.  

Having the proper support is essential for registering your business in Indonesia. InCorp Indonesia (an Ascentium Company) can help you navigate this process. 

• Company Registration: Let experts handle the paperwork and compliance through incorporation. This ensures a seamless transition from planning to incorporation. 
• Business License: Obtain the correct permits tailored to your industry, without the regulatory headaches. 

Take the next step toward building a trusted, high-growth business by completing the form below.