Public Limited Company
As per the Company Act, a company that is not a private company is known as a public company. A private company, subsidiary of a public company shall be deemed to be a Public Company. The minimum requirement for a Public Company is seven shareholders and three directors and no restriction on the maximum shareholder. So let’s discuss in detail the registration of a Public Limited company.
Introduction to Public Limited Company
Through an initial public offering (IPO), a public company can issue securities to the general public and a public company can only be listed on stock exchanges. These companies are subject to higher levels of reporting, regulations, and public scrutiny. A listed Public company must meet stringent reporting requirements framed by Securities and Exchange Board of India (SEBI).
A Public Ltd. company has all the characteristics of Private Ltd. Co. and the ability to possess any number of members, ease in transfer of shareholding and more transparency. Identifying marks of a Public Ltd. Co. is through name, shares, formation, number of members management, directors and meetings, etc.
What are the features of a Public Limited Company?
- Minimum shareholders - 7
- Minimum Directors - 3 (Directors and shareholders can be same person)
- At least one Director who shall be resident in India
- Minimum capital requirement is Rs 5 lakhs.
What are the Advantages of a public limited company?
1. More Capital
When you are selling shares to the public it means that anyone can invest in your company, so it's a greater source for the value of funds.
2. Goodwill
As more attention is given to public limited companies as it is listed on an exchange which ensures mutual funds and other traders take note of your business. So it's a great way to make your business a prominent name.
3. Growth and expansion opportunities
There is a perfect opportunity for the growth and expansion of the business.
What are the disadvantages of a Public Limited company?
1. More Regulations
For a public limited company regulations are more stringent. Your company must have all the professionals to handle the queries and to stay compliant with all the rules and regulations of a public company.
2. Transparency
Public limited companies are held accountable and more thoroughly scrutinised by auditors.
3. Control over shareholder
It’s much harder to control who is a shareholder of your company, so there’s a possibility of losing control of the direction of your business.
What is the procedure for Public Limited company formation?
1. Digital Signature Certificate (DSC) & DIN:
For all the proposed Directors of the Company DSC and Director Identification Number (DIN) must be obtained.
2. Name Approval:
Name approval has to be obtained from the Registrar of Companies [“RoC”] through submission of an application in Form No. – INC 1 and the applicant can give a maximum of six names in order of preference. The approved name by the authority is valid for sixty days. The Promoter /Subscriber to the MOA and AOA shall be the applicant for the availability of name application. The approved name by the authority is valid for 3 months. Name approval generally takes 1-2 business days.
3. Filing documents with MCA:
After having name approval, the draft Constitutional Documents of proposed Company i.e. Memorandum of Association and Articles of Association of the company is to be drafted and then it is filed with the Registrar of Company along with the forms and other necessary documents stated below.
Subscription Pages of MOA & AOA – MOA &AOA shall be signed by each subscriber to the memorandum of the company who shall provide details of his name, address, description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall likewise sign and add his name, address, details of occupation etc. The witness shall be a practicing professional i.e. practicing CS, Practicing Cost & Management Accountant, or practicing CA.
And in case of foreign subscribers the above mentioned documents should be attested by the Consulate of the Indian Embassy in the respective Country or by foreign public notary.
In case of wholly owned subsidiary, a copy of the Board resolution of Holding Company approving the investment in the proposed Indian Company and authorizing a person to sign the papers of incorporation on behalf of the company, duly attested by the officer of the Indian Embassy in the foreign country where the registered office is situate is also required to be attached with the papers.
Some other documents such as Affidavits, Consent Letters, and Certificate of Compliance from practicing professionals in Form No INC – 8, etc. will be made and filed with the incorporation forms.
4. Certificate of Incorporation
After submitting all the documents along with forms as mentioned and explained above for the registration, ROC will inspect the documents and then file
Required Documents
| Acceptable Document | Document Type | Additional Details |
|---|---|---|
| Passport in case of foreign nationals | . | . |
| Registered Office address proof (rent agreement) | . | . |
| Residence Proof (Electricity Bill/Telephone Bill/Mobile Bill/Bank Statement) | . | . |
| Identity Proof (Voter ID/Aadhar Card/Driving License/Passport) | . | . |
| Income-tax PAN of Indian nationals | . | . |
FAQs
You Ask, We Answer
As this company deals with public money, it has to make rather heavy compliances strictly, which are bulkier than those performed by a private limited company. Apart from the regular compliances related with income tax, there are many periodic and annual compliances to be made by a public limited company with ROC/MCA, SEBI, RBI, etc.
A public limited company has several advantages, which are listed below: • The public limited company, as opposed to the private limited corporation, has a far larger capital base. • It is permitted to trade on a stock exchange by law. • There is no limit to the number of shareholders.
The term Public Limited Company refers to a type of limited company that has no restrictions on the number of shareholders or the transfer of shares, something a Private Limited Company cannot do. It raises funds from the general public and takes deposits from the general public. The Board of Directors has the authority to administer and operate the public limited company established by the shareholders' unanimous approval.
Yes an NRI or Foreign national can also be a shareholder or director in public limited company of India.
• Minimum shareholders - 7 • Minimum Directors - 3 (Directors and shareholders can be same person) • At least one Director who shall be resident in India • Minimum paid up capital worth INR 5 lakh
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