Public Limited Company

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ABOUT PUBLIC LIMITED COMPANY

Public Limited Company governed in India by Companies Act 2013, and define under section 2(71). A public company is a company that has permission to issue registered securities to the general public through an initial public offering (IPO) and it is traded on at least one stock exchange market. A public company is not authorised to begin its business operations just upon the grant of the certificate of incorporation. In order to be eligible to run as a public company, it should obtain another document called certificate of business.

A Public Limited Company must have minimum of 7 members and there is no bar on maximum number of members. Owner and management of a public company enjoys limited liability.

A Public Limited Company should have atleast 3 directors and one-third as independent directors.

ADVANTAGES

LIMITED LIABILITY

The liability of a public company is limited. No shareholder is individually liable for the payment. The public limited company is a separate legal entity, and each shareholder is a part of it.

BOARD OF DIRECTORS

A public company is headed by a board of directors. It should have a minimum of 3 and can have a maximum of 15 board of directors. They are elected from among the shareholders by the shareholders of the company in annual general meetings. The elected directors act as representatives of the shareholders in managing the company and taking decisions. Having a bigger board of directors therefore benefits all shareholders in terms of transparency as well as fostering a democratic management process.

TRANSPARENCY

Public limited companies are strictly regulated and are required by law to publish their complete financial statements annually to ensure the true financial position of the company is made clear to their owners (shareholders) and potential investors. This also helps to determine the market value of its shares.

GROWTH & OPPORTUNITIES

By having less risk, it’s the perfect opportunity for growing and expanding your business – investing into new projects and products, through the money gained via shares. Banks are often more willing to extend finance to a public limited company, with a stock exchange listing frequently improving your creditworthiness.

CAPITAL

A public company can raise capital from the public by issuing shares through stock markets. Public companies can also raise capital by issuing bonds and debentures that are unsecured debts issued to a company on the basis of financial performance and integrity of the company.

TRANSFERABLE SHARES

A public limited company’s shares are purchased and sold on the market. They are freely transferred among the members and the people trading on stock markets.

SPREADING RISK

The more people that buy shares in your Public limited company, the more the risk is spread out.

It’s also safer than relying on one or two angel investors, as the level of influence is spread out wider amongst your many new shareholders.

PRESTIGE

Having Public limited company at the end of your company’s name adds prestige and grandeur to your business. Future customers, suppliers, and employees will view your business more positively if it has those letters at the end of the name. Even more so if it’s also listed on a stock exchange . It can even lead to free publicity with the media devoting more attention to such firms.

MINIMUM REQUIREMENTS

  • Minimum 7 Shareholders.
  • Minimum 3 Directors.
  • One of the Directors must be Indian Resident
  • Minimum Authorised Share Capital Rs. 500,000 (INR Five Lac)

DOCUMENTS REQUIRED FOR REGISTRATION

IDENTITY AND ADDRESS PROOF

 Aadhar Card, Aadhar number is now a necessity for applying for any registration in India.

 Income tax return can only be filed if the person has linked his PAN card with Aadhar number.

 For Indian nationals, PAN is mandatory. For foreign nationals, apostilled or notarised copy of passport must be mandatorily submitted.

 Residence proof documents like bank statement or electricity bill should not be more than 2 months old.

 All documents submitted must be valid

REGISTERED OFFICE PROOF

  • Register office of all companies must be in India .If it is a Rented Property, Rent agreement and NOC from a landlord. If it is a Self-owned Property, Electricity bill or any other address proof.
  • Documents submitted must be valid and not more than 2 month old.

For setting up a public limited company anywhere in India, there are required a minimum of Seven Shareholders and Three Directors; the directors can also be shareholders. The requirement of the minimum paid-up share capital worth INR 5 Lac, has been removed by the Companies (Amendment) Act, 2015.

As a public limited 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. These regulatory liabilities are in addition to securing and promoting steadily the profits and welfare of all shareholders of the public limited company.

There are the following two authentic options for registering a public limited company anywhere in India :

OPTION 1

Register the company through filing the Integrated Incorporation Form INC-29, with the MCA.

OPTION 2

  • Apply for getting approval and reservation of any of the proposed names, through Form INC-1, sent to the Central Registration Centre.
  • Filing Form INC-7 for incorporation of the public limited company.
  • Filing Form INC-22, Form DIR-12, etc., together with all required documents.

Yes, an NRI or Foreign National can also be a shareholder or director in a public limited company of India. For becoming a director, besides the basic requirement of being a sensible adult, such a person must possess the DIN issued by MCA.

Capital means investment made by shareholders into the company. Authorised capital is an amount up to which company can issue shares. This capital is mentioned during incorporation of the company based on which ROC registration fees and stamp duty is paid. Paid up capital is an actual investment which goes from shareholders into company bank account, against which share certificate is issue by the company.

No. After company is registered, it need to open a company bank account and then anytime within two months of incorporation, capital can be deposited into Company bank account.

This is not true, a Public limited company is one of the mode of doing business, which means it can be started from scratch. For that matter even after incorporating a Public limited there is no obligation that the company must have sales or turnover.

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PUBLIC LIMITED COMPANY

INR 6,999/-
6999
  • Min 7 members
  • Not Required
  • Few Tax Advantages
  • Moderate Compliances
  • 7-8 days