Looking to register your business as Public Company and still not sure about its nature and documentation at incorporation stage?
We at Compliance Calendar LLP can help you register your Public Limited Company and do the follow up with the CRC at Ministry of Corporate Affairs as and when required during the complete registration process.
Public Limited is eligible to raise capital not only from its promoters, relatives, investors but also from the public at large by offering its shares for sale in open market. The shares of a public limited are freely tradeable and can be listed on a recognized stock exchange for real-time sale-purchase.
Shares of public company can be acquired by anyone, either privately through initial public offering (IPO) or via trading on the stock market. Since all the information relating to company are available in the public database, it is easy to authenticate the existence of the business which helps in improving credibility of public company.
A Public Limited Company is stringently regulated and is required to publish its true financial wellness to its shareholders and are usually constituted to generate capital from external sources, i.e. the general public for starting a business, business expansion, technological advancement, global expansion, etc.
As per Companies Act, 2013, Public company means a company which:
(a) is not a private company; and
(b) has a minimum paid-up share capital, as may be prescribed
Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles.
Public company may be formed for any lawful purpose by seven or more persons by subscribing their names to a memorandum and complying with the requirements as prescribed in the law. The board of the Public company comprises of a minimum number of three directors and a maximum of 15. The company may appoint more than 15 directors after passing a special resolution. These are elected by the shareholders during the annual general meeting. They act as the representatives of the shareholders in the management of the company. Public limited companies are headed by a board of directors and Key Managerial Personnel of the Company. Composition of the board of directors is set out in the company’s articles of association and the applicable rules and regulations. Shareholder liability for the losses of the company is limited to their share contribution only. This is what makes it a separate legal entity from its shareholders. The Public Limited Company can be sued on its own and not does not involve its shareholders.
Public limited companies are required by law to publish their complete financial statements annually. This ensures that they reveal their true financial position to their owners and to potential investors so that they can determine the true worth of its shares. A public limited company has many advantages over Private Limited Company and the ability to have any number of members, ease in transfer of shareholding and more transparency makes it popular amongst foreign investors.
What are the Different Types of Public Limited Companies in India?
Public limited companies can be divided into two main types:
1. Listed Company
A listed public limited company has its shares available for trading on one or more stock exchanges. This means that anyone, including the public and financial institutions, can buy and sell its shares. This type of company benefits from greater liquidity and access to a wider range of investors.
2. Unlisted Company
An unlisted public limited company does not have its shares traded on stock exchanges. As a result, its shares are less easily transferable, and it faces fewer regulatory requirements. This type of company may be ideal for businesses that want to attract a broader group of shareholders without dealing with the complexities of being publicly traded.
Benefits of Public Limited Company Registration in India
The following are the benefits of Public Limited Company Registration in India:
Limited Liability
One of the best features of Public Limited Company registration is that the liability of the person who invests money into the business (also known as shareholders) will be limited to the amount invested by them which also means that personal property of the promoters will remain safe and secure. This limited liability builds confidence of businessmen to fulfil their dream of having their own Company.
Separate Legal Entity
The separate legal entity feature gives your company to keep yourself and the company at length in liabilities recognizing its own separate identity. In the eyes of law, Company and its Representatives are different personalities and Company can sue and be sued on its own name without the name of its shareholders or directors.
Perpetual Succession
This is what makes the registered company different from proprietorship or partnership firms where on the death of proprietor/ partners, the firm ceases to exist but in case of registered company, even the death of all directors/shareholders cannot stop the company to exist.
Easy Exit and Transferability
During the lifetime of the Company, if all or any of the shareholders wish to exit from the company, they can do so by simply transferring their shares. It is very easy to transfer shares to other person by way of share transfer arrangements. This gives shareholders the freedom to take informed decision whether to continue or not at any given point of time.
Owning Property
Company being a legal person can own property on its own name through its Legal Representative. The Property includes Intellectual Property (IPR) such as Trademark, Copyright, Patent and Design too. Company can also mortgage property the same way as a natural person to banks or any other financial institution.
Borrowing Capacity
Company being a Legal Person, when there comes a requirement to borrow capital or funds, it can be done through various modes of borrowing. Some of them could be Private Equity/ Angel Investor/ Venture Capitalist/ Short-term capital from Directors or their Relatives and Debts through Banks or FIIs.
Investment Ready
Any Investor who is looking to make investment generally prefers Limited Company than any other business structure. This is what makes a Limited Company investment ready. Public Limited Companies enjoy an increased ability to raise capital since they can issue shares to the public through the stock market. They can also raise additional capital by issuing debentures and bonds through the same market from the public. Debentures and bonds are in the form of secured or unsecured debts issued to a company on the strength of its integrity and financial performance by the general public or its members etc.
Requirements for Online Public Company Registration in India
Here are the requirements to form a Public Limited Company (PLC):
Minimum Shareholders
To start a public limited company, you need at least seven shareholders. There’s no maximum limit on the number of shareholders.
Board of Directors
You must have a minimum of three directors. Each director should have a valid Director Identification Number (DIN).
Authorized Share Capital
The company must have a minimum authorized share capital of ?1 lakh to meet initial registration requirements.
Digital Signature Certificate (DSC)
Since the registration involves electronic document submission, at least one director must have a Digital Signature Certificate to sign the documents.
Company Name
The proposed name for the company must be unique and comply with the Companies Act and Rules, ensuring it’s not already in use.
Other Documents
You’ll need to prepare key documents like the Memorandum of Association (MOA) and Articles of Association (AOA). Additionally, you must fill out Form DIR-12 to register the directors’ details.
Documents Required to Form a Public Limited Company in India
Public Limited Company is registered under the Companies Act, 2013 and regulated by the Ministry of Corporate Affairs (MCA) with its extended hand called Registrar of Companies of the respective states where the company will have its registered office address.
To register your business as Public Limited Company, there are certain set of documents required to begin with the registration procedure of Public Limited Company under the regime of Central Registration Centre (MCA).
You will be glad to know that most of the documents which are filed with the Department are drafted by us for your convenience. List of documents required from your end:
Identity Proof is required for all the proposed shareholders and directors. Identity Proof will be PAN Card copy in case of Indian Nationals and apostilled/ notarized copy of Passport for Foreign Nationals. All Documents must be self-attested.
Two Address Proofs are required for proposed shareholders and directors. One is Driving License/ Passport/ Voter ID and Second is Bank Statement/ Electricity Bill/ Mobile Bill/ Telephone Bill.
Mobile Number and E-mail ID are required for all the proposed directors. It is to be noted that the Mobile Number and E-mail ID to be provided shall belong to the directors only and not of any professional or closed relatives too. Further, one email address of Company is also required.
- Educational Qualification
Educational Qualification of the proposed directors is to be provided. It is not required to provide the proof for the educational qualification. The CRC (MCA) does not ask for its copies to be attached with the incorporation documents.
A recent copy of the Electricity bill/ Gas bill/ Mobile/ Telephone bill is required. A rental agreement or lease/sale deed along with NOC from the landlord with his/her consent to use the office as a registered office is also required. Rent Agreement would not be required if the place is in the name of any of the directors.
- Draft Documents for SPICE+
Finally, based on the above documents provided we prepare the drafts documents as per the company law which are required to be submitted to CRC (MCA). At CCL, we make it simple with our experience and knowledge of regular Company Registration for you. You are not required to visit any place and we will complete the company registration procedure at the comfort of your home as the process is completely online.
Note: In addition to the above documents, you need to share with us the desirable company name and we will check its availability. Scope of the company, proposed share capital, place of business, profit sharing ratio are some of the basic information we do require from your end.
Online Procedure for Public Limited Company Registration in India
The following is the step-by-step process for registering a public Limited Company (PLC) in India:
Step 1: Get Digital Signature Certificates (DSC)
Start by obtaining Digital Signature Certificates for all proposed directors and shareholders. This is needed to file forms online on the Ministry of Corporate Affairs (MCA) portal.
Step 2: Apply for Director Identification Number (DIN)
Each director must apply for a Director Identification Number (DIN) using the SPICe form. You’ll need to provide proof of identity and address.
Step 3: Check Company Name Availability
Use the MCA portal to see if your desired company name is available. Make sure it doesn’t clash with existing trademarks or company names.
Step 4: File SPICe+ Form
Once your name is approved, fill out the SPICe+ form, which covers all legal requirements for incorporation. You’ll also need to submit the Memorandum of Association (MOA) and Articles of Association (AOA) with this form.
Step 5: Receive Certificate of Incorporation
After you submit the SPICe+ form and documents, the Registrar of Companies (ROC) will review everything. Once approved, you’ll receive a Certificate of Incorporation, which legally establishes your company and includes its Corporate Identification Number (CIN).
Step 6: Apply for PAN and TAN
With your incorporation certificate, apply for the company’s Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). These are crucial for tax purposes.
Step 7: Open a Company Bank Account
Finally, open a bank account in the company’s name. You’ll need the Certificate of Incorporation, MOA, AOA, PAN, and other documents to set this up.
Step 8: Additional Steps
Depending on your business type, you may need further approvals or registrations, like GST Registration or industry-specific licenses. If you need help with any of these steps, the experts at Compliance Calendar LLP can assist you in starting your Public Limited Company in India.
The Incorporation procedure for a public company is similar to the private company. However, it is to ensure that the proposed company is in compliance with the minimum requirement of the members and Directors in a public company and MOA & AOA are drafted as per the requirement of the new Companies Act, 2013. The name shall be suffix by the word “Limited”. If you are planning to raise funds from the public through Initial Public Offer (IPO) in future then Start your company today with us by incorporating Public Limited Company or you can also convert your existing Private Limited to Public Company with the help of Compliance Calendar LLP.
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