Public Limited Company

A Public Limited Company under Company Act 2013 is a company that has limited liability and offers shares to the general public. It’s stock can be acquired by anyone, either privately through (IPO) initial public offering or via trades on the stock market. A Public Limited Company is strictly regulated and is required to publish its true financial health to its shareholders.

What is a Public Limited Company?

A Public Limited Company is defined under Section 2(71) of the Companies Act, 2013 as:

• a company which is not a private company
• a company with a minimum paid-up share capital of INR 5 lakhs.

Note : Under the Companies Act, 2013, a subsidiary company shall be deemed to be a public company if it is not a subsidiary to a private company, even if it is a private company as per its articles.

What are the Requirements for Incorporating a Public Limited Company?

Documents required for incorporating a Public Limited Company

• Passport sized photographs of all the Directors
• Copies of the Identity documents of all the Directors- Aadhar Card, Voter Card, PAN card
• DSC (Digital Signature Certificate) of all the Directors
• DIN (Director Identification Number) of all the Directors
• In case the office is in a rented property – the rent agreement
• In case the office is an owned place – the property ownership documents
• The water bill and the electricity bill of the business place
• No Objection Certificate by the Landlord
• Memorandum of Association (MoA)
• Articles of Association (AoA)

It is necessary that all the documents pertaining to registration of a Public Limited Company are in order to avoid any legal complications later on.

Requirements/Process for registration of Public Limited Companies

There are various rules and regulations prescribed under the companies act, 2013 for the formation of a public limited company.  Here is what you should keep in mind when registering a public limited company:

• Minimum 7 shareholders are required to form a public limited company
• Minimum of 3 directors is required to form a public limited company
• The minimum share capital of Rs. 5 lakhs is required
• Digital signature certificate (DSC) of one of the directors is needed while submitting self-attested copies of identity and address proof.
• Directors of the proposed company will need a DIN
• An application is required to be made for the selection of the name of the company
• An application comprising the main object clause of the company is to be made. This object clause will define what a company will pursue after its incorporation
• Submission of the application to ROC along with the required documents like MOA, AOA, duly filled Form DIR – 12, Form INC – 7 and Form INC – 22 is needed
• Payment of the prescribed registration fees to the ROC is required
• After obtaining an approval from the ROC, the company should apply for the ‘certificate of business commencement.’

Advantages

Separate Legal Entity :

 A Public Limited Company is considered as a separate legal entity from its shareholders. It has a perpetual existence and can have its own PAN, bank accounts, approvals, contracts, licenses, assets and liabilities.

Multiple avenues of funding :

 Public Limited Company can raise funds from individuals as well as from financial institutions. The funds may be raised via equity shareholding, preference shareholding or debentures.

Easy transferability of shares :

 This is one of the biggest advantages of a Public Limited Company. The shares can be easily transferred by a shareholder to other legal entities – be it an individual or an organization, in India or abroad. The directorship of the company can also be changed for ensuring business perpetuity.

Limited liability :

 The shareholders of a Public Limited Company are given Limited Liability Protection. In a situation of unexpected liability, the same would be limited only to the company and not affect the shareholders.