The legal form of a public limited company

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The public limited company or abbreviated AG, an association under private law, is a corporation in which the share capital is divided into shares. The international significance of the public limited company as a form of enterprise is high.

Most important features of the AG 

It is the typical corporate form of companies with high capital requirements. A public limited company is a corporation, thus a legal entity based on membership but with independent legal capacity as an association, which itself acts as the bearer of rights and obligations and can sue and be sued in court. 

The share capital is divided into shares. The AG is a corporation, a company that is based on a certain share capital in such a way that the liability of the members, i.e. the shareholders, is limited to this capital. 

Shares are normally transferable, although trading on the stock exchange is not mandatory. An AG often brings together a large number of shareholders who have invested their capital in the company. The shareholders exercise their membership rights in shareholders' meetings (annual general meeting) by exercising their voting rights.

Historical background 

As early as the Roman Empire, there were the first models of the principle of share division in economic undertakings. Several merchants entered into cooperative agreements in order to finance expensive trade journeys.

In the Middle Ages, ore mining and ore processing companies in Austria and Prussia joined forces in order to be able to make long-term investments in costly underground enterprises.

Today's economy is dominated by joint-stock companies 

By issuing new shares or corporate bonds, AGs can raise new capital relatively easily. This makes it much easier than with many other forms of enterprise. This is why large companies in particular choose the joint-stock company form. However, it is also popular with fast-growing firms in emerging sectors of the market. 

As long as there are still enough buyers for a company's shares on the stock exchange, the stock corporation's existence is independent of its owners, which consolidates the company's existence. In the case of listed companies, small investors via exness client area can also participate and thus share in the company's success. If the company fails, there is the risk of total loss of the money invested.

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The corporate bodies of an AG 

The most important organs of a joint-stock company are the executive board, the supervisory board and the general meeting.

Control yes, but not bound by instructions 

The executive board of a public limited company manages the company according to § 76 para. 1 AktG. It usually consists of several persons. The executive board is controlled in its work by the supervisory board, but is not bound by instructions. 

Often one member of the executive board is appointed chairman or spokesman of the executive board. The chairman of the executive board is elected by the supervisory board, whereas the speaker of the executive board is appointed by the executive board as a whole. 

A member of the executive board is employed under a contract of employment. The executive board represents the joint-stock company in and out of court. Its tasks are the overall power of management and the overall power of representation such as bookkeeping or annual accounts. 

The executive board convenes the ordinary and extraordinary general meetings. Usually, the executive board is appointed for an initial term of three years and from then on for five years. All board members are personally liable to the company, i.e. with their personal assets, for damages incurred by the company due to a culpable breach of duty.

Supervision and control 

In a joint-stock company, the supervisory board elects the members of the executive board and supervises their activities. In addition, the supervisory board represents the company vis-à-vis the members of the executive board. The chairman of the supervisory board heads the supervisory board. The term of office of a supervisory board is a maximum of 4 years and it is entrusted with the appointment of the auditor.