Mar 04,2019 | 5 min read

How Public Limited Companies Raise Capital

How Public Limited Companies Raise Capital

This form of legal economic entity is often called a limited liability company that has the permission to offer shares to the public. In a Public limited company, no shareholder is individually liable for the payment and is neither authorised to begin its business operations just upon the grant of the certificate of incorporation.

One of the main advantages of a Public Limited Company is that anyone can invest in the company, meaning more capital will be generated in comparison to a private limited company. But this autonomy to the public can become a burden for some corporation, making it a risky business for its members. The ability of public to buy shares means that there will be a lot at stake but on the other hand, it also means that there’s big potential for growth and expansion.

Public Limited companies raise capital and how they raise capital should aid you in having a holistic understanding towards your workspace and follow the right measures to get maximum returns.

Here are some suitable measures for your PLC to raise capital:

Sale of Goods and Services

The first measure for a PLC to raise capital is through selling goods and services to the public. This sale from purchasing a product or a service helps the company to obtain funds and pay its bills.

Issue bonds

The second measure comes into play when your company has reached that maturity stage where it can issue bonds that mature at some point in the future.

Stock Exchange through an Initial Public Offering (IPO)

The process of initial public offering allows the company to become public when it sells off its stocks in the general public. A company can raise equity capital with initial public offering, by issuing new shares to the public or the existing shareholders can sell off their shares to other people without raising any fresh capital.

Public Limited companies can pursue new projects, buy more products, pay off debts and fund R&D.

What we need to understand is that, when do these measures become important for your public limited company and in what capacity can you incorporate these useful ways to raise capital.

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