As per the Companies Act, 2013, a Public Limited Company is a type of company that has limited liability and can offer its shares to the general public. Furthermore, anyone can acquire its stock in two ways. First, privately through Initial Public Offerings (IPO) or secondly by selling on the stock market. A Public Limited Company is sternly regulated and is supposed to present its financial status to all the shareholders. Keep reading this article to know more about Public Limited Companies, its requirements, and how you can register one.
What is a Public Limited Company?
Public Limited Company is defined under the Companies Act, 2013. Public Limited Companies are a voluntary accumulation of members which can be incorporated by minimum of seven members. Moreover, it has separate legal existence apart from its members. Also, the shares of the company can be freely transferred without taking prior approval from the shareholders. Furthermore, the existence of the entity is not affected due to the demise, retirement and insolvency of any of the shareholders. Also, Public Limited Companies can invite capital and deposits from the general public. Additionally, these companies can be listed or unlisted.
What are the requirements to register a Public Limited Company?
There are various rules & regulations prescribed under the Companies Act, 2013 for setting up a Public Limited Company. Therefore, you should keep the following pointers in mind before registering a Public Limited Company:
- Minimum 7 shareholders are required to incorporate a public limited company;
- Minimum 3 directors are required to form this type of company
- Digital Signature Certificate (DSC) of all the proposed directors & shareholders;
- Also, Directors of the proposed company would require a (DIN) Director Identification Number;
- Moreover, an application has to be made to the MCA for selecting the company name in the RUN Form;
- Then incorporation form SPICe is filed with the ROC along with the necessary documents;
- Intimation & prior approval of SEBI is required in case of a listed company;
- Making the payment of the prescribed registration fees to the ROC for public limited company incorporation.
Features of a Public Limited Company
The characteristics of Public Limited Companies are as follows;
- Directors: According to the provisions of the Companies Act, 2013 to start a public limited company, a minimum of 3 directors are needed;
- Liability is Limited: The liability of each shareholder is limited. Generally speaking, a shareholder of a public company isn’t personally liable for any loss or debts of the company for any amount greater than the amount invested by them on the contrary to the partnerships and sole proprietorship firms, where the business owners are personally liable for the losses of the business. However, this characteristic of a public limited company does not offer legal immunity to the shareholders. The shareholders will be held responsible for their own illegal actions.
- Prospectus: There is a requirement under the Companies Act for listed public limited companies to issue a prospectus. Furthermore, a prospectus is a comprehensive statement of the affairs of the company issued by public limited companies for its public.
- Name: It is mandatory as per the Companies Act, 2013, for all the public limited companies to add the word ‘limited’ after their name.
Documents required for Public Company Registration
The following documents are required to register a public Limited Company in India;
- The Proof of identity of all the shareholders and directors
- Address proof of all the directors and shareholders
- PAN of all the shareholders and directors
- The Utility Bills of the proposed office
- A No Objection Certificate (NOC) from the landlord where the office of the company is situated
- (DIN) Director Identification Number of all the directors
- (DSC) Digital Signature Certificate of the directors
- (MOA)Memorandum of Association
- (AOA)Articles of association
Procedure to obtain Public Limited Company Registration
Advantages of Public Limited Companies
The pros of forming public limited companies are as follows;
- You can gain more capital
As the Shares are offered to the general public at large, that means anyone can invest in public limited companies. Hence, it improves the capital of the company.
- Also, you get more attention
Also, being listed on a stock market ensures that mutual funds, hedge funds and other traders take note of the business of the company. It may result in better business opportunities for Public Limited Companies.
- The risk is distributed
As the shares are sold to the public the unsystematic risk of the market is distributed.
- Opportunities for growth and expansion
Due to the decreased risk, there is a perfect opportunity for growing and expanding the business by investing in new projects from the money raised through shares.
A Public Limited Company is one which can publicly trade its shares. Furthermore, this type of company must have at least seven members. Also, it is the largest form of business entity model in India. Moreover, there is no limitation on the maximum limit of members of the company. However, in the case of Listed Public Companies, there is a need to take approval from SEBI after five hundred members in the entity.
Read our article:How to Register Your Limited Liability Partnership Firm in India?