What is a Public Limited Company?
A Public Limited Company is an organization that has limited liability and offers shares to the public. A public limited company’s stock can be obtained by anybody, either secretly through (IPO) Initial Public Offering or using trades on the securities exchange (Stock Market).
It is strictly regulated and is expected to publish its actual monetary wellbeing to its shareholders.
A Public Limited Company registration in India is the best business structure for the entrepreneurs who wanted to start their business operations on a large scale. It enjoys all the privileges of a corporate entity along with the characteristics of Limited Liability. A public limited company is also listed on the stock exchange to raise its capital from the common public.
Section 2(71) of the Companies Act, 2013 states that a “Public company”
(a) is not a private limited company and;
(b) having a minimum paid-up capital as prescribed
If any other company is the subsidiary of a public limited company, then it shall deemed to be a public company for the act even if the company is listed as a private limited company in the articles.
Features of a Public Limited Company
- Directors –
According to the Companies Act, 2013 to start a business as a public limited company, at least 3 directors are required and there are no limitations on maximum directors.
- Limited Liability –
Every shareholder has limited liability. In basic words, the shareholder of a public limited company is not responsible personally if the company suffers any loss or debts. Every shareholder is liable only for the amount which is invested by them.
- Paid-up Capital –
Minimum paid-up capital of Rs 5 lakhs required or any higher amount as prescribed in the act.
- Prospectus –
It is a statement of affairs of the company given by a public limited company for its public and the public limited company must issue the prospectus under the provisions of the companies act 2013.
- Name –
As a result of the Companies Act 2013, public companies are required to add “limited” to their company names.
Benefits of a Public Limited Company
Separate legal entity –
The Company is registered under the Companies act 2013 as a public limited company as its separate legal entity. It has perpetual existence.
Multiple methods of funding –
It can raise funds from individual and financial institutions. Funds can be also raised in the form of equity shares, preference shares and debentures.
Easy transfer of shares –
It is perhaps the greatest benefit of a Public Limited Company, the shares can be effectively moved by shareholders to other legal entities – it can be anyone in the world. (Individual or the organization) Directors of the company can also be changed to ensure the perpetually of the business.
Limited Liability –
Public limited company shareholders are given limited liability security.
Growth opportunities –
As the association has an immense capital base the advancement openings are moreover tremendous
Management –
The Board of Directors of a public limited company has control of the organization. The board of directors is elected by the shareholders.
Requirements for Registration of a Public Limited Company
There are different principles and guidelines recommended under the companies act, of 2013 for the public limited company formation. Things to remember while the registration:
- Requirement of a minimum 7 shareholders for framing a public limited company.
- For the formation of a public limited company minimum of 3 directors is required.
- The share capital of 5 lakhs minimum is required.
- For the submission of self-attest copies of identity and address proof, a digital signature certificate (DSC) of one of the directors is required.
- Directors of the proposed organization will require a DIN.
- An application is expected to be made for the choice of the name of the organization.
- An application containing the main object clause of the organization is to be made. This clause will characterize what an organization will pursue after the incorporation.
- Requirement of the submission of the application to ROC alongside the documents like MOA, AOA, properly filled Form DIR – 12, Form INC – 7 and Form INC – 22.
- Payment of the registration fees to ROC.
- After the ROC’s approval, the “certificate of business commencement” should get applied.
Documents required for the incorporation of a Public Limited Company
- Every Director’s passport size photographs.
- Identity Documents Copies of all Directors-Aadhar Card, Voter Card, PAN Card.
- DSC (Digital Signature Certificate) of every director.
- Director Identification Number {DIN) of the Directors.
- For rented property – The rent arrangement.
- For owned property – Ownership documents of the property.
- Water bill and the electricity bill of the business place.
- NOC of Landlord.
- Memorandum of Association (MOA)
- Articles of Association (AOA)