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.
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.
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.
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.
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.
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.
GROWTH AND 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.
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)
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Company Registration
Documents Required For Registration
Identity And Address Proof
Aadhar Card, Aadhar number is now a necessity for applying for any registration in India. Also, income tax return can only be filed if the person has linked his PAN card with Aadhar number.
Address proof will be required for all directors and shareholders of the company to be incorporated. 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.
Process
Name Approval Application
Name Applications Under RUN Will Be Processed By Central Registration Centre (CRC). The Name Approval Is Subject To Comprehensive Check By The Central Registration (CRC) And Thereafter Approval Or Rejection Shall Be Communicated By E-Mail To The Applicant. The Name Approved Under RUN Process For New Company Registration Is Valid For A Period Of 20 Days From The Date Of Approval. In Case Of Change Of Name Of An Existing Company, The Name Shall Be Valid For 60 Days From The Date Of Approval. RUN Company Name Application Fee Is Rs.1000.00. This Fee Is Additional To The Regular Fee To Be Paid Through SPICE Application For Company Registration. RUN Company Name Application Mandatory Process. Alternatively, The Applicant Can Apply Company Name Through The Integrated SPICE Application For Company Registration. In That Case, We Can Submit ONLY ONE Name For Seeing Approval. However, There Are TWO Changes Of Re-Submissions For SPICE Application. So, Effectively The Applicant Can Submit FOUR NAMES (1-Original Submission + 1 Re-Submissions) For Approval Without Any Extra Cost.
DSC (Digital Signature)
A Digital Signature Is Electronic Signature, Which Is In The Form Of Codes. It Is Used For Signing The Electronic Forms, Filed With ROC For Incorporation Of Company. Digital Signature Cannot Be Used In Physical Documents. The Company Registration In Procedure Is Completely Online And Hence It Requires Digital Signature To Incorporate A Company. It Is Mandatory For Subscribers And Directors To Have A Valid DSC (Class II Or III). You Can Get A DSC From Us In Just One Day. If You Already Have A Digital Signature, Then You Can Use The Same But Check For Its Validity Since Agencies Issues DSC’s With Either One Or Two-Year Validity.
Apply For Din (Director Identification Number)
Director Identification Number Is A Unique Number Which Is Given To Existing Directors Of Incorporated Companies.
Rule 2(D) Of Companies (Appointment And Qualification Of Directors)Rule 2014 Defines Director Identification Number As An Identification Number Which Is Allotted By The Central Government To Any Individual, Intending To Be Appointed As Director Or To Any Existing Director Of A Company For The Purposes Of Identifying As A Director Of A Company.
The Following Points Are The Purpose Of Using DIN
- It’s A Unique Identification Number.
- The Entire Database Of The Director Can Be Found Using DIN
- The Name Of The Director, Address And PAN Number Can Be Found.
- The Past Companies In Which He Had Worked And Present Company In Which He Is Working Can Be Found.
- Once Obtained DIN Number, The Director Can Use The Same For Life Irrespective Of The Company He Works In. A Change In The Company Doesn’t Change The Director Identification Number.
Form Spice (Inc-32) Moa (Inc-33), Aoa (Inc-34), Agile
Form INC-32 Must Be Accompanied By Supporting Documents Including Details Of Directors & Subscribers, Affidavits, Declarations, Identity Proof, Address Proof, MoA And AoA Etc. Once The EForm Is Filed, Its Processed By The MCA’s Central Processing Centre.
If Found Complete Company Would Be Registered And CIN Would Be Allocated. Also DINs Gets Issued To The Proposed Directors Who Do Not Have A Valid DIN. Maximum Three Directors Are Allowed For Using This Integrated Form For Filing Application Of Allotment Of DIN While Incorporating A Company. Once All The 4 Forms Ready With The Applicant, Upload All Three Documents As Linked Form On MCA Website And Make The Payment Of The Same.
- In Respect Of Non-Individual First Subscribers Who Are Based Outside India, Pdf Attachments Of Apostilled MOA And AOA Shall Be Attached With SPICe (INC-32).
- SPICe AoA (INC-34) Has Facility For Adding, Modifying, And Deleting Articles. Thus If Additional Article Is Required, We May Add The Same
- DSC Is Mandatory For All Subscribers And Witnesses In EMoA (INC-33) And EAoA (INC-34). EMoA And EAoA Shall Be Used Only Where The Maximum Number Of Subscribers Do Not Exceed 7. In Case The Numbers Of Subscribers Are More Than 7, MoA And AoA Shall Be Attached Manually To SPICe And DSC Is Not Mandatory In Such Cases.
- Two Resubmissions Are Only Permitted In The E-Form
- SPICe EMoA And EAoA Have To Be Uploaded As ‘Linked Forms’ To SPICe (INC-32).
- The Ministry Of Corporate Affairs (MCA) Has Notified An E-Form Known As AGILE – Application For Registration Of The Goods And Services Tax Identification Number (GSTIN), Employees’ State Insurance Corporation (ESIC) Registration And Employees Provident Fund Organization (EPFO) Registration.
- GSTIN Application Via E-Form AGILE And Mandatory To File INC-35 While Submitting SPICe Form.
- It Is Mandatory To Apply For PAN And TAN For The Proposed Company Along With SPICe Form.
Certificate Of Incorporation
Incorporation Certificate Shall Be Generating With CIN, PAN & TAN. Company Has To Pay The Stamp Duty Irrespective Of The Capital Because Stamp Duty Is State Matter. Companies Act, Has Given Exemptions For The ROC Fees Not For The Stamp Duty With Authorized Capital Of Rs. 10 Lakh Or Below.
Pan & Tan Application
Once You Receive The Certificate Of Incorporation Apply For PAN And TAN As They Would Be Required For Opening A Bank Account. You Can Also Apply For The Same Along With INC-32 At The Time Of Incorporation.
Commencement Of Business (Inc-20a)
EForm INC-20A (Declaration For Commencement Of Business) Is Required To Be Filed Pursuant To Pursuant To Section 10A(1)(A) Of The Companies Act, 2013 And Rule 23A Of The Companies (Incorporation) Rules, 2014.
As Per New Section Inserted After Section 10 Of The Companies Act 2013, Section 10A Says A Company Incorporated, Having Share Capital Shall Not Commence Its Business Or Exercise Any Borrowing Powers Unless A Declaration Is Filed By The Directors Within 180 Days From Date Of Incorporation Of Company. The Registrar Of Companies That ‘Every Subscriber To The MOA Has Paid The Value Of The Shares Agreed To Be Taken By Him On The Date Of Making Of Such Declaration”
FREQUENTLY ASKED QUESTIONS
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.