A Public Limited Company (PLC) is limited, meaning its members have limited liability.
This means that the shareholders of a PLC are only liable for the debts of the company up to the amount unpaid on their shares. Their personal assets are protected from the company's debts, unless they have provided personal guarantees for business loans. This limitation of liability is a key distinction of PLCs.
Key Aspects of Limited Liability in a PLC:
- Shareholder Protection: Shareholders are not personally responsible for the company's debts beyond the value of their investment. This encourages investment as it caps the potential loss.
- Encourages Investment: The limited liability structure makes PLCs attractive to a wider range of investors because the risk is capped.
- Legal Separation: A PLC is a separate legal entity from its shareholders, reinforcing the limited liability principle.
In summary, a Public Limited Company (PLC) provides limited liability to its shareholders, protecting their personal assets from the company's debts.
