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Public Limited Company

Many businesses choose to incorporate a company limited by shares rather than a sole proprietorship, partnership, LLP or company limited by guarantee. Do remember that companies limited by shares are primarily set up as private limited companies. This article looks at the advantages and disadvantages of a public limited company. We have tried to provide a proper evaluation of the advantages and disadvantages of a public limited company is given here for an existing private limited considering to convert to a Pvt ltd company.

If you’re not sure about your business entity type, we’d strongly suggest you speak to our tax experts, who can give you detailed information and advice that takes account of your circumstances. For Public Limited Company Registration, a minimum of 7 and  Maximum of 50 Shareholders. Among these shareholders minimum 3 have to directors at all times. 10 Lakhs of Paid-up Capital is required. A Public limited company enjoys all the advantages of a Private Limited Company and have any number of members, ease in transfer of shareholding and more transparency. Public Limited Registration is done through TAXAJ.

A public company as per Section 2(71)-

👉 A company which is not a private company.

👉 A company whose minimum paid up capital is 5,00,000/-

👉 The company being  subsidiary of a company, which is not being a private company it shall be a public company for the purposes of the act

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About This Plan

Get your public limited company registered in the fastest possible manner.

Created by potrace 1.15, written by Peter Selinger 2001-2017

Timeline

It usually takes 7 to 10 working days.

Buy Now
Services Covered
Who Should Buy
How It's Done
Documents Required
Services Covered

  • Name approval in RUN (Reserve your unique Name)
  • DSC (3 nos)
  • Filing of SPICe+ Form
  • Issue of Incorporation Certificate along with PAN and TAN
  • Includes Govt Fees & Stamp duty for Authorised Capital upto Rs. 1 Lakh except for the states of Punjab, Madhya Pradesh and Kerala
  • Excludes foreign national / Body Corporate as director or business needing RBI/SEBI approval
  • Assistance in Opening Bank Account
Who Should Buy

  • Businesses looking to expand or scale operations on higher level
  • Startups looking to raise capital and issue ESOPs
  • Businesses looking to convert their existing firm structure into private limited company
  • Businesses aiming to work globally or with reputed clients
How It's Done

  1. DSC Application

  2. Name approval form filing

  3. Preparation of Incorporation Documents

  4. Getting those docs signed by the respective stakeholders

  5. Filing of e-Forms with ROC

  6. Receipt of Incorporation Certificate with PAN, TAN, GST, EPF, ESI & Bank Account.

Documents Required

  1. Name, Contact Number and Email Id of all the Stakeholders.

  2. Directors Identification Number, if already.

  3. Self Attested PAN, Aadhar & Passport size photo of all the Stakeholders.

  4. Apostilled Passport, Mobile Bill and other KYC docs in case of NRI Stakeholder.

  5. Latest Month Personal Bank statement of all the Stakeholders.

  6. Specimen Signatures of all Stakeholders.

  7. Few Proposed Business Names along with Objects.

  8. Latest Electricity Bill/Landline Bill of Registered Office.

  9. NOC from owner of registered office. (If Owned)

  10. Rent Agreement from Landlord. (If Rented/Leased)

  11. Brief description of main business activities of the proposed Company.

  12. Shareholding pattern between the Stakeholders.

  13.  Authorised & Paid Up Share Capital of the Company.

All About Public Limited Company Explained in Easy Language!

Characteristics of a Public Limited Company:

features of a public limited company
  Separate Legal Entity

A Public Company is a legal entity that has a separate identity from its shareholders/ members. So a Public Limited company that can own property in its name.

  Name

In the name of the public company, the word “LTD” will be prefixed at the end of the name.

  Borrowing capacity

The attraction point of the public company is that it can borrow from various sources. A public company can issue Debentures (secured or unsecured) and raise the money. For the public, it can also issue shares (equity or preference). Even banking and other financial institutions give loans/ financial aid to the company.

  Certificate of Commencement

A public company, Certificate of Commencement is an important document that has to be acquired by the public company before starting the business. In the case of a private company, the Certificate of Incorporation was the last document required. However, in the case of a public company, the Certificate of Incorporation and the Certificate of commencement are needed.

  Limited Liability

The liability of the shareholders/directors is limited to the extent of the shares owned by them. The shareholders are not liable personally in case of losses or debts suffered by the company.

  Easy Transferability

Ease means that a shareholder of a public limited company can quickly transfer its shares to the public. There is no restriction on transferring shares to the public or inviting the public to subscribe to shares to the public.

  Prospectus

The registration of a public limited company can issue a prospectus for inviting the public to subscribe to its shares. The prospectus is the statement comprising the company's detailed information and the number of shares invited by the company in that particular IPO or subsequent listing.

  Minimum Subscription

The minimum amount received on the subscription of shares has to be 90 per cent of the shares in the public company. When the company cannot receive the 90 per cent amount, they cannot continue with the business.

  Minimum Subscribers

The minimum subscriber to the Memorandum of Association of Public Company has to be 7.  They are the members of the company.

  Perpetual Succession

In a public company, the number of directors can be a minimum of 3, and the maximum can be as many. There is no above limit. They must only possess the Director Identification Number (DIN) issued by the Ministry of Corporate Affairs (MCA).

  Perpetual Succession

The company can never come to an end. Succession means that the members/ directors/ shareholders may come and go, but the company never becomes non-existent. Due to death or disability, the company never dies. It continues till the company is not closed or liquidated.

  Number of Members

The minimum number of members in the public company required is 7 and for maximum there is no limit.

  Board of Directors

The minimum number of BOD required is 3 and maximum is 12. They are elected by shareholders in the Annual General Meeting.

  Voluntary Associations

It is easy to buy shares in the public company and so it is as easy to exit the public company. 

  Memorandum of Associations

The MOA is an essential document in the formation of a public company. That has to be submitted to MCA in the registration process. It is defined in section 2(56) of the Companies Act 2013. It states the main objectives of the companies, that is, the main businesses which the company is going to undertake.

  Paid Up Capital

The minimum paid-up capital required by a public company to start its operations is Rs 10, 00,000. This is the new amendment as per the Companies Act, 2013

Procedure for Registration of a Public Limited Company

   DSC

The company registration procedure is entirely online. A digital signature will be required for filing the forms on the MCA portal. For all proposed directors and the subscribers of the memorandum and articles of association, DSC is compulsory.

   DIN

It is an identification number concerning a director; it has to be procured by anyone who intends to become a director in a company. The DIN of a proposed director and the name and address proof have to be mentioned in the company registration form.

   REGISTRATION

You need to submit a duly filled SPICe+ form on the MCA portal with required documents. The company director needs to register on the MCA portal, then the director will access the MCA portal services, which comprises filing e-forms and viewing public documents.

   COI

Once the registration application is submitted along with the concerned documents, the Registrar of Companies will inspect the application. After the application is verified, he will issue the Certificate of Incorporation of the Public Company.

  Advantage of a Public Limited Company

As a limited company, a public limited company shares the advantages of a limited company with its private counterpart. But there are also specific features of a public limited company, many of which reinforce one another, that give it some unique advantages:

  Raising capital through public issue of shares                                             

The biggest advantage of being a public limited company is raising share capital. Mainly company is listed on a recognised exchange. Since it can sell its shares and anyone can invest their money, the capital raised is larger than a private limited company. It’s also possible that having stock listed on an exchange could attract investment.

  Other Finance Opportunities                                        

As well as share capital, a public limited company will often find itself in a better position when looking at other potential sources of finance. The demands of being a public limited company and maintaining a stock exchange listing, for example, can help to improve a company’s creditworthiness when issuing corporate debt (and therefore reduces the return the company needs to offer investors). Banks and other financial institutions may be more willing to extend finance to a public limited company, particularly one that is listed. The company could also be in a better position to negotiate favorable interest rates and repayment terms on loans.

  Prestigious profile and confidence                                        

Having ‘plc’ as the suffix of a company name adds an extra layer of prestige. There is a sense of superior status about a public limited company than a private limited company. This perception of being more established, larger and more powerful affect customers, suppliers and employees. More people are likely to know the company if it is public, mainly listed on a stock exchange. Better brand recognition leads to more sales & business. It may also attract potential business partners.

Credibility and confidence are reinforced by:

👉 Operating under a stricter legal regime than private companies.
👉 Higher share capital requirements
👉 Greater transparency (for example, required form of accounts)
👉 For listed companies, the indirect endorsement of having their shares listed on a recognised exchange.
Again, these factors can affect the behaviour of (potential) shareholders, customers and business partners.

  Widening the shareholder base and spreading risk                                  

Offering shares to the public allows spreading the risk of company ownership among a large number of shareholders. This may allow early investors to sell some of their shares at a profit while still retaining a substantial stake in the company. Obtaining capital from a wide range of investors has advantages over relying on one or two “angel investors”, as many private companies will choose to facilitate growth. While an angel investor may provide a large amount of capital and expertise, the founders may not be comfortable with the level of influence over the company’s direction that the angel will often expect.

  Growth & Expansion Opportunities                                        

The value of being able to raise finance is in how it can be employed to serve the business. By having more finance potentially more readily available and on better terms than a private company, the public limited company can be in an advantaged position to:

👉 Pursue new projects, new products or new markets
👉 Make capital expenditure to support and enhance the business
👉 Make acquisitions (whether in cash or by offering shares to the shareholders of the target business)
👉 Fund research and development
👉 Pay off existing debt (or replace existing debt with new debt on better terms)
👉 Grow organically

  Transferability of Shares                                        

The shares of a public limited company can easily be transferred than a private limited company, meaning shareholders benefit directly from liquidity. If shares are listed on a stock exchange, shareholders and potential shareholders will generally find it easier to transfer shares among themselves and the company. Without restrictions on the transferability of shares unlike in private limited companies, it’s also easier to deal with situations like a shareholder’s death, allowing shares to be transmitted in line with the terms of any will.

  Compliance's for a Public Limited Company

Holding Board Meeting

This is the first compliance that needs to be done by Public Limited Company. Meeting among the board members, the first meeting of the Board shall be conducted within 30 days by Public Limited Company. Thereafter, at least 4 Board meetings to be conducted every year with a gap of 120 days between each meeting of the Board. This means that every by Public Limited Company shall have a minimum of 4 board meetings every year and gap must not be more than 120 days between subsequent Board meeting or every quarter one meeting. Records of these Board meeting shall also be created which is known as minute of the meeting. For this, registers are to be maintained by the Company. It can also be prepared digitally. Here the agenda of the meeting, attendance of members and the discussion are recorded.


Appointment of the Auditor

The auditor for the Company shall be appointed by the Board of Directors within a period of 30 (Thirty) days from the Date of incorporation of the Company. The appointment shall be filed in ADT-1. In case of failure of the Board to appoint the first auditor within the said period of 30 days, the Board shall inform the members of the Company who shall appoint an auditor within a period of 90 days. The appointment can only be done in an extraordinary general meeting.


Disclosure of Interest by Directors

It is to be noted that every director shall in its first board meeting discloses about the interest in any company, firm or other AOI (including any shareholding interest). The disclosure of interest shall be filed every year, if there is any change in the interest, it is to be filed along with the list of relatives as well. This disclosure of interest shall be filed in MBP 1 form shall be submitted with the Company.

Declaration of Commencement of Business

Declaration of Commencement of Business shall be filed in Form 20A. It is a mandatory compliance and needs to be filed with due time lines as prescribed below. The Form 20A shall be certify by the professional like CA CS or CMA


Due date for the first time filing of Form 20A  

ParticularsDue date
If the Company is incorporated on/or after 2nd November 2018The form must be filed within 180 days From the date of incorporation


Note: Failure to comply with annual compliance may lead to the removal of the company’s name from the Register of Companies.


Holding Annual General Meeting

The Public Limited Company shall hold a general meeting every year. It is mandatory to conduct it on or before 30th September every year. In case of first AGM shall be held within 9 months of closing of Financial Year. It is to be noted that the AGM shall be conducted within office hour ie. 9 AM to 6PM. The day must not be a public holiday and a clear notice of 21 days shall be given to the members. The Approval of accounts, appointment/re-appointment of auditors, Remuneration of directors are some of the agendas of AGM.


Filing of Annual Return

RoC Filing is nothing but submission of annual accounts and financials prepared by the Company. Here, list of shareholders, directors, interest, details of other things, board reports and other stuff required to be furnished by the Company with RoC.

Following are the forms which required to be submitted.

Form MGT-7 (Annual Return)Public Limited Company shall file its Annual Return within a period of 60 days from the date of holding of Annual General Meeting (AGM).
Form AOC-4 (Financial Statements)Public Limited Company shall file its Balance Sheet together with statement of Profit and Loss Account and Director Report within a period of 30 days from the date of holding of Annual General Meeting (AGM).


Certification of Annual Return in case of listed company:

It is mandatory to get the certification if the listed company having paid up share capital of 10 Crores or more and turnover of 50 Crores or more, From Company Secretary in Practice. The certificate shall be in FORM MGT-8.


Requirement of Secretarial Audit Report

  • Every Listed Company
  • Public company if having paid up share capital of equal to or more than 50 Crores.
  • Every public company having a turnover of 250 Crores or more has to obtain secretarial audit report in form MR-3 from Practicing Company Secretary.


KYC of Directors of the Company

All directors are required to file a form to do the KYC with the RoC, if you have already submitted the form then one needs to verify the OTP over email and mobile no. otherwise all new director needs to submit this form.

Due Date for filing DIR-3 KYC: On or before 30th April of immediate next Financial Year


Income Tax Filing, GST Filing, TDS Filing & Other Filings as applicable

Every company has to file their Taxes as per the applicability, where Income Tax is mandatory and rest Goods & Services Tax, Tax Deducted at Source, Professional Tax, Employees Provident Fund, Employee State Insurance, etc depends upon various things such as Company, Turnover, State, that will be guided by your Chartered Accountant.


Other Compliances for Unlisted Company

Return of Deposits

Rule 16 of Companies (Acceptance or Deposit) Rules, 2014 provides for the Return of Deposit should be filed before the Registrar of Companies in FORM DPT-3 on 30th June of every year.