Public Limited Company Registration
Public Limited Company is a form of legal structure for business in India and ideal for raising Capital from public. Shares are listed and traded in recognized Stock Exchange NSE, BSE. Registration requires minimum paid up capital of INR 5 lakhs together with 7 shareholders and 3 directors.
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Deliverables
3 DSC & 3 DIN
Company Name Reservation
Articles of Association (AOA) and Memorandum of Association (MOA)
Corporate Identification Number (CIN)
PAN and TAN of your Company
About
Public Limited Company
A Public Limited Company (PLC) is a separate legal business entity which offers its shares to be traded on the stock exchange for the general public. According to the regulations of the corporate law, a PLC has to compulsorily present its financial stats and position publicly to maintain transparency.
Characteristics of Public Limited Company (PLC)
A public limited company is very different from private limited companies; however, both are there in the business for profit earning. Following are the various features of a PLC:
Ownership
The ownership of a PLC lies with seven or more shareholders who own the shares of the company.
Index of Members
A public limited company needs to keep an index of its members with their names.
Paid Up Capital
The Company needs to have a minimum paid-up capital as decided by the corporate law of that country. According to the Companies Act, 2013, a PLC in India needs to keep rupees five lacs as a minimum paid-up capital.
Perpetual Succession
The Company’s existence is independent of the death, bankruptcy or insolvency of any of the member.
Formation
A PLC can be formed with the appointment of at least two directors and one qualified company secretary.
Directors
A public company needs to have three or more directors for its existence.
Name
The Company has to end its registered name with the word ‘limited’ for making it a PLC.
Limited Liability
The liability of the shareholders of a public limited company in case of loss or debts is only limited to the amount of investment they have made in the company. Their assets cannot be charged liable for any such damages.
Prospectus
It is mandatory for a public limited company to issue a prospectus which is the statement of present and plans of the company.
Abided by Law
A public limited company has to abide by the corporate laws of the country. Indian PLCs have to follow the regulations of the Companies Act, 2013.
Incorporation
Incorporation of a Public Limited Company (PLC) in India
A public limited company has a distinct identity and is owned by the public and managed by the board of directors.
Therefore, the registration procedure of a PLC is quite lengthy and involves a lot more formalities. Let us now go through the various requirements for this form of business organization:
Eligibility
The basic requirements or eligibility criteria for setting up a public limited company are as follows:
One Resident Director
Minimum Seven People
Unique Name
Documentation
Documents Required to Register a Public Limited Company
A PLC next requires certain documents as evidence of the directors’ identities and the registered office of the business. These are explained in detail below:
Identity Proof
The disclosure of the identity of the company’s directors include the following:
- One personal identity proof like voter id, driving license, adhaar card or passport
- PAN card for Indian nationals and passport for foreign nationals is compulsory
- Nationality proof for foreign nationals
- Two passport size photographs
- Resolution of the board of company / LLP for authorization of directors or partners
Address Proof
The address proof of the directors involve electricity bill, mobile bill, telephone bill or bank statement (any one of these and not older than two months).Proof of Registered Office
The place where the business is to be commenced or controlled is its registered office. Such documents include:
- NOC from Landlord
- Rent receipts along with the rental agreement, conveyance, lease deed, etc. (any one of these)
- Photocopy of gas bill, telephone bill or electricity bill (either one of these) which is not older than two months.
Other Documents
Other than the documents mentioned, the following are some more relevant documents need to be submitted under particular conditions or otherwise:
- Digital Signature Certificate (DSC) physically signed by the directors and the shareholders.
- In the case of foreign directors, all the documents should meet the following obligations:
- Notarized; if residing in Commonwealth countries
- Notarized & Apostiled; if living in a country which is a signatory to Hague convention
- Notarized & consularised; if not covered in the above categories.
Procedure
Public Limited Company Registration Procedure
Apply For the Digital Signature Certificate
First of all, you have to apply for the Digital Signature Certificate for all the proposed directors in the company. DSC is used to sign the e-forms and is an authentic and safe method to file all the documents on an electronic platform. It is a mandatory document.
A director can easily obtain DSC from the nearest Certifying Authorities or CAs with self-attested coppices of their identity proof. It takes around 1 -3 working days to obtain a DSC.
Apply For DIN
Ministry of Corporate Affairs has simplified the DIN procedure, as an applicant can apply for it through the SPICe+ form and do not require filing any other form. It is mandatory for all the directors of the company to apply for their Director’s Identification Number.
Name Verification
The third step involves name registration of the company. You can check the name availability through the MCA portal by following this step
Visit the MCA Portal> select the MCA services> Click Check Company Name
Note: The company name should not be taken or registered and should not be similar to a brand name.
Filing Form SPICe+
Once the company’s name has been approved you can now file the SPICe+ form to avail the company incorporation certificate. Along with it, you have to file all the required documents such as MOA (Memorandum of Association) and AOA (Article of Association). These two documents contain the details of the mission, objectives, aims, visions, and business activities, responsibilities of all the directors and shareholders and definition of the proposed company.
All the documents and applications are further verified by the higher authorities and it takes around 7 to 9 working days.
Obtaining Certificate of Incorporation
Once all the applications and document to have been received to the authorities and they have verified it, the company would receive the Certificate of Incorporation which will include CIN and date of incorporation.
Availing the PAN TAN Of the Company
Once you have got the Certificate of Incorporation, now you can apply for the PAN and TAN application by the MCA. It would take around 1 to 3 working days.
Open a Bank Account
With the help of PAN card and Certificate of Incorporation, you can easily open a bank account at your Company’s name. And Here You Are Done With The Public Company Registration.
Advantages
Advantages of Public Limited Company (PLC)
Public limited companies have contributed a lot to economic growth and development in a country. The different benefits of a PLC are explained one by one in detail below:
High Credibility
Tax Efficient
Limited Liability
Additional Capital
Expert Board of Directors
Business Growth and Expansion
Easy Share Trading
Risk Spreading
Disadvantages of Public Limited Company
Though PLC is an excellent option for the entrepreneurs who lack capital for starting a business, it has certain drawbacks making it unsuitable for business aspirants. Following are the limitations of the public limited companies:
More Regulations: A company is abided by the laws and regulations formed by the corporate houses to function as a public limited company which is a hefty task.
Loss of Ownership: Ultimately, a company has to go public to work as a PLC, which leads to giving up of owner’s possession over the company. Lack of Control: The loss of ownership leads to the loss of control over the decision making of the company.
Disclosure of Company’s Financial Position: A PLC has to disclose the complete financial health of the company in front of the public to assure a high level of transparency.
Profit-Sharing: The profit sharing is done on a vast scale among all the shareholders, which entitle each one of them a tiny proportion of that profit.
Benefits of Public Limited Company Registration
Here are the benefits provided to the company with Public Limited company registration
Limited Liabilities for the Shareholders of the Company
Shareholders of the public company enjoy the benefits of limited liabilities under which their assets are safe and cannot be used to clear the debts and losses of the company. Despite of it, the shareholders are responsible for their own legal offenses. All the members, directors and shareholders enjoy this right and their assets cannot be seized by any bank, creditors or government bodies.
Perpetual Succession
A public limited company is considered as a corporate body that has perpetual succession. Means in case of death, retirement, insanity, and insolvency of one or more members/ shareholder/ directors, the company still continue its existence.
Improved Capital of the Company
In a public limited company, the general public is invited to buy the shares of the company. Hence, anyone can invest in a public company that improves the capital of the proposed company.
Borrowing Capacity
A public company can enjoy unlimited sources for borrowing funds. It can issue equity, debentures and can accept the deposits from the general public by selling its shares. Moreover, most of the financial institutions find public companies more prominent than other unregistered companies.
Fewer Risks
Since public companies can sell their shares to the public, it lesser the scope of unsystematic risks of the market.
Better Opportunities for Growth and Expansion of the Company
Fewer risks lead to better opportunities so that the company can grow and expand by investing in new projects from the funds raised by selling its shares in the market.