Everything You Should Know About Public Limited Companies

 

Public Limited Company, like other businesses, is registered in accordance with the Companies Act of 2013. A public business has limited responsibilities for its members & the ability to sell its shares to raise funds for the company. It can be formed with as few as 3 directors & has more severe rules and regulations than a Pvt. Ltd. company.


It must possess a minimum of 7 members and no limit on the highest number of members. It offers all of the advantages of a private limited company, plus greater transparency and simple transferability of ownership & shareholders. The name, shares, creation, number of members, administration & directors, and other factors distinguish a public limited company from a private limited corporation.

Important Features of a Public Limited Company

There are some important features of a Public limited company. The features are stated & discussed below:-

Total Numbers of Directors in the Company
According to the rules of the Companies Act 2013, a public limited company must consist of a minimum of three directors to establish a business. However, there is no limitation on the highest number of directors.

The Company's Name
All public limited corporations must have the term "Limited" at the end of their name. It is used to represent the identity of a public company.

The Company's Prospectus
The prospectus of the firm is required for public limited corporations. It is distributed to the general public by the prospective firm. It is a detailed explanation of the company's works and affairs. On the other hand, private corporations are exempt from such regulations since they do not have the authority to sell their stock to the general public.

Paid-up Capital
No paid-up capital is needed for public limited company registration.

Benefits of Public Limited Company Registration


There are certain benefits that a company enjoys with the public limited company registration:

The Company's Shareholders Have Limited Liabilities
Shareholders of a public corporation benefit from restricted liabilities, which means that their assets are protected & cannot be used to pay off the firm's debts and losses. Regardless, the stockholders are personally liable for their own legal violations. All members and directors enjoy this privilege, and shareholders & their assets cannot be confiscated by any bank, creditor, or government body.

Permanent Succession
A public limited company is a business body with perpetual succession. This means that even if one or more members/shareholders/directors die, retire, become insane, or become bankrupt; the firm will continue to exist.

Increased Company Capital
The entire public is invited to purchase shares in a public limited business. As a result, anybody can participate in a public business that increases the proposed firm's capital.

Borrowing Power
A public corporation has access to an unlimited number of borrowing sources. It has the ability to issue equity and debentures and collect contributions from the general public by offering its shares. Furthermore, most financial institutions see public corporations as more prominent than unregistered companies.

Fewer dangers
Because public corporations may sell their shares to the general public, the market's unsystematic risks are reduced.

Better Opportunities for Company Growth and Expansion
Fewer risks lead to more potential for the firm to develop & develop by investing in new initiatives with cash obtained from selling its stock in the market.

Public Limited Company Registration Process
Filling Out the Form
The application form for forming a public limited company must be completed. This must be completed via the relevant MCA site. In addition, all documentation must be presented.

Obtaining DSC and DIN
The candidate must then apply for a Digital Signature Certificate & a Director Identification Number. The digital signature certificate would ensure the validity of electronic documents. Aside from that, the DSC assists in the execution of electronic signatures in accordance with the provisions of the act. In addition, by applying for a DIN, the firm will be able to hire a minimum number of directors to meet the criteria of a public limited company.

Verifying the Company's Name
In this phase, the company's name is examined and verified in accordance with the Ministry of Corporate Affairs' standards (MCA). The company's name must not be identical to any other name. Aside from that, the company's name must not violate any Indian intellectual property law laws.

SPICe Form Submission
When the appropriate authorities authorise the name of the public limited company, the applicant will file the SPICe form to get the Certificate of Incorporation. When the applicant submits the SPICe form, the DIN number is assigned to the company's directors.

Document Submission
After satisfying the initial stages, the applicant must provide all required papers to the MCA. The Memorandum of Association & Articles of Association papers must be filed with the authorities. The firm must also present supporting paperwork such as its mission, goals, objectives, and long-term ambitions.

Forming the Corporation
Following verification of the procedure, the MCA & Registrar of Companies will grant the public limited company's certificate of formation. This certificate is a legally binding document to show the status of the public company.

Establishing a Bank Account
Finally, a bank account in the name of the public company must be formed. This must be open in order for the organisation to conduct day-to-day transactions. This bank account must be distinguished from opening a personal bank account.

Documents Required for Public Company Registration


The documents that are required for public company registration are as follows:

  • Identity documents like Aadhaar, PAN, driving license, & voter card are needed for all the selected directors & shareholders.

  • Proof of residence for all potential directors and shareholders of the firm.

  • PAN card information for all directors and shareholders

  • Utility bills from the registered office, like telephone, gas, water, or electricity, can be used to verify the company location. It should be no more than 120 days 

  • No Objection Certificate from the business location's owner.

  • The authorised director's Digital Signature Certificate

  • Articles of Association and Memorandum of Association (MOA)

Requirements for a Public Limited Company Registration


According to the regulations of the Companies Act, 2013, the following conditions must be met to form a public company in India:

  • In addition, a minimum of seven shareholders are required for the proposed firm.

  • The proposed firm must have at least three directors.

  • There is no minimum capital requirement.

  • At least one director should possess a Digital Signature Certificate (DSC).

  • Articles of Association and Memorandum of Association

  • The prospective public corporation must apply for the "Certificate of Business Commencement" after receiving clearance from the Registrar of Companies.

Conclusion
A public company is an establishment whose shares are sold on a public stock exchange. A person seeking to register a public company must distinguish between a public limited company and a private limited company. To raise funds, shares are traded on the stock exchange. The main offering is when a corporation sells shares on a stock market for the first time. Depending on the circumstances, public firms can pursue secondary offers. 

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