A Public Limited Company (PLC) has comparatively more transparency and credibility in business than a Private Limited Company. Further, a public limited company has a higher degree of financial exposure to raise capital from the public in the form of Equity or debenture or deposit. Furthermore, a public company can register itself with a minimum of three Directors. Lastly, a Public Company is always preferred by those individuals who have a broad vision from startup to Initial Public Offer (IPO).
After obtaining the public limited company’s registration, the concerned entity will have all the benefits of the Private limited company together with the ability to have an unlimited number of shareholders or members. This company can easily quickly sell its shares which will indeed offer more transparency and clarity for the shareholder lenders, creditors, and the bankers.
What is a Public Limited Company Registration?
A Public Limited Company (PLC) has more transparency and clarity in business in comparison to any other type of business structure. This company requires seven members and three directors for its commencement. According to the rules and regulation prescribed in the Companies Act 2013, a public company can issue its shares to the public and can also accept deposits from the public. Further, the stock of these companies can be easily and quickly be acquired either privately or by way of initial public offering (IPO) or even by trading in the recognized stock market. Further, a Public company is strictly regulated and administered by the rules and regulations of the Companies Act 2013. Moreover, the company must show its true and accurate financial status to its members or shareholders.
What are the Features of a Public Limited Company?
Following are the features of a public limited company –
- Members – According to the provisions prescribed in the Companies Act 2013, a Public Company requires a minimum of seven numbers to get it registered. Further, there is no such limit prescribed regarding the maximum number of members required in the company.
- Directors – For bringing a Public Limited Company into existence, a minimum of three directors are required. Furthermore, even in this case, there is no restriction prescribed regarding the maximum number of directors.
- Name – It is significant to note that the name of the company should be unique, and members of the company must check with the registrar regarding the availability of the prospective company name before finalizing any name. Lastly, the name chosen must not violate any of the rules and regulations prescribed in the Companies Act 2013.
- Capital – No Minimum amount is prescribed regarding the company’s paid-up capital.
- Prospectus – The concerned Public Company is needed to issue a prospectus for the public. Further, the Prospectus is a detailed statement regarding the company’s affairs which must be known to all the members and shareholders investing in the company.
- Limited Liability – This means the liability pertaining to each member of the shareholder is limited, which means whenever the company faces any sort of loss, the individual member of the shareholder concerned are not required to sell their personal assets for payment. Hence, in this case, there is no risk to any individual regarding their personal asset.
- Perpetual Succession – The Company concerned will keep on existing in the eyes of the law forever till the time it is specifically dissolved. Further, in case of the death, insolvency or the bankruptcy, the company business and management is not affected.
- Separate Legal Entity – As per the rules prescribed under the Companies Act 201, a Public Company enjoys the status of a separate legal entity distinct from its members. Further, the members or the shareholders of the company concerned do not have any liability or obligation towards the creditors of the company.
What are the requirements regarding the Registration of a Public Limited Company?
There are several rules and regulations which are specified under the Companies Act, 2013 deals with the setting up of a Public Limited Company. Hence, the individual concerned should keep the following points in mind while registering a Public Limited Company –
- Minimum 7 shareholders or members are needed to start a public limited company.
- Minimum 3 directors are needed to form a public company.
- DSC (Digital Signature Certificate) of all the proposed directors and shareholders.
- Also, the Directors of the proposed company would need a Director Identification Number (DIN).
- Moreover, an application is required to be made to the Ministry of Corporate Affairs regarding the selection of the company name in the Reserve Unique Name Form (RUN)
- Then incorporation form SPICe is to be filed and submitted with the ROC together with the necessary documents
- Intimation and prior approval of the SEBI is needed in case of a listed company
- Making payment of the prescribed fees for registration to the Registrar of Company for the incorporation of a public limited company.
What are the Advantages of Public Company?
Following are the advantages annexed with the concept of a public limited company –
- Raising of the share capital by issuing shares to the public – The company concerned can issue its share to the public at large, i.e. everyone is eligible to invest in the public limited company, which will indeed enhance its share capital.
- Expansion of the shareholder base together with spreading risk – Having a large number of shareholder bases will help in spreading the company’s risk regarding the ownership among large number of public. Also, there is no need to rely upon anyone or two or more investors only. Lastly, if a huge number of shareholders are investing in the company, it will indeed be helpful to the company.
- Growth and Development Authorities – A large amount of capital investment in the company will help in the expansion and growth of the company. Further, with more amount of capital investment, the business concerned can be expanded further, debts can easily be paid off, and new projects can easily be started.
- Liquidity – As per this benefit, the shareholders are eligible to buy and sell their shares easily (if in the case listed on the recognized stock exchange). Further, the shareholders are less obligated to remain with the company, and this fact indeed attracts more amount of investors for the company.
What are the Documents Required for the Registration of a Public Company?
Following are the documents required for the registration of a Public Limited Company –
- The identity proof regarding all the shareholders and directors
- Address proof regarding all the directors and shareholders
- PAN (Permanent Account Number) Card of all the company’s shareholders and directors
- The Utility Bills like the electricity bill, water tax etc. of the proposed office
- A No Objection Certificate (NOC) from the concerned landlord where the registered office of the company is located
- Director Identification Number (DIN) of all the directors
- Digital Signature Certificate (DSC) of the directors
- Memorandum of Association (MOA)
- Articles of association (AOA)
What is the Procedure regarding the Registration of a Public Company?
Following is the procedure for incorporating a Public Limited Company –
- Identification of a minimum of seven members or shareholders together with three directors.
- The Digital Signature Certificate (DSC) of one of the proposed directors with a self-attested identity proof of the same selected director. Further, a public limited company registration form is duly filled and submitted online. For the purpose of submitting the online registration form the Digital Signature Certificate of all the directors is needed. Lastly, The Digital Signature Certificate (DSC) can easily be obtained by the certifying or the appropriate authority in India.
- Director Identification Number (DIN) can be received by just submitting the needed documents of the concerned director to the MCA (Ministry of Corporate Affairs). Further, the Director Identification Number (DIN) can also be obtained by filing an application together with the id and address proofs of the director. The concerned application form will be furnished to the MCA (Ministry of Corporate Affairs). Now, the DIN for a maximum of three directors can easily and directly be obtained by just filing the registration form of the public limited company.
- It is significant to note that having a properly registered address is a must for the concerned company. Further, all the important and required documents will be sent by the ROC (Registrar of Company) to this registered address only. Furthermore, this registered address need not be a commercial address only. Lastly, the registered address can be of any of the members.
- In the next step, it is required that the name of the company concerned must end with the suffix ‘limited’. Further, before heading towards the incorporation, an application must be made to the Registrar of Company for the approval of the proposed name. Furthermore, the concerned application for the name approval should be filed with multiple suggested names arranged in the order of the preference. Lastly, the name application is filed in the RUN (Reserve Unique Name) Form, and then submitted to the Ministry of Corporate Affairs.
- After the approval of the name, in the next step, the members of the company concerned must put into effect the following documents such as the Memorandum of Association (MOA) and the Articles of Association (AOA). Now, these documents can easily be prepared in electronic form, i.e. MOU (Memorandum of Association) and AOA (Articles of Association).
- Once the eMOA and eAOA are duly prepared and drafted, they have to be submitted together with the incorporation form (SPICe) to the Registrar of Company (ROC).
- After verifying and cross-checking all the documents, the Registrar of Company will issue a Certificate of Incorporation. Further, the Registrar of Company (ROC) will also allocate a CIN (Certificate Identification Number) to the company which is registered.
- Lastly, even if all the above-prescribed requirements are completed, then also the members cannot commence the business until and unless the declaration is made regarding the subscription money. The prescribed subscription money is to be paid in one eighty days by the directors.
A Public Limited Company (PLC) is such a business structure which can easily and publicly trade its shares. Further, this type of company should have at least seven members or shareholders together with three directors. Also, it is one of the largest and oldest forms of business format model prevailing in India. Moreover, there is no limitation prescribed regarding the maximum limit of members a company should have. However, in the case of Listed Public Companies, there is a requirement to take prior approval from the SEBI (Securities Exchange Board of India) after completing five hundred members in the concerned organization.