Public Limited Company is registered according to the rules prescribed under the Companies Act 2013 of India. Public limited company has limited liability and offer shares to general public at large. This type of business is suitable for large scale investment where the capital is very large and company is willing to receive money at a large scale from public. Usually, public trust these companies more as there is less risk as compared to others.Here we will discuss about the process of Public Limited Company Registration.
What is Public Limited Company Registration?
A Public Limited Company has more transparency in business in comparison to other type of business entities. This company is formed by 7 members and 3 directors. According to the rules prescribed in the Companies Act 2013 the company can issue shares to public and accept deposits from public. The stock of these companies can be easily acquired either privately or through initial public offering (IPO) or by trading in the stock market. Public limited company is strictly regulated by the rules of the Companies Act 2013 and the company should show its true financial status to the shareholders.
Characteristics of Public Limited Company Registration?
As per provisions of Companies Act 2013 the company requires a minimum of 7 numbers to get started. There is no such limit on the maximum number of members in the company.
For the company to come in operation the existence of minimum 3 directors are needed. Even there is no restriction on the maximum number of directors.
The name of the company should be unique and one should check the company name availability before finalizing any name. The name chosen should not violate any of the rules prescribed in the Companies Act 2013.
No minimum paid up capital is required.
The company is required to issue a prospectus for the public. Prospectus is detailed statement of the company affairs which should be known to all the shareholders investing in the company.
- Limited Liability
The liability of each member or shareholder is limited. As in when the company faces any loss the individual shareholder can sell there assets for payment. No risk is there to any individual asset in this case.
- Perpetual Succession
The life of company keeps on existing in eyes of law forever. In case of death, insolvency or bankruptcy the company business is not affected.
- Separate Legal Entity
As prescribed under the Companies Act 2013 the Public Limited Company is a separate legal entity. The members of the company have no liability to the creditors of the company.
Read our article:How to Register a Public Limited Company in India?
Public Limited Company Registration Process/Requirements
- Identification of minimum of 7 members and 3 directors.
- Digital Signature Certificate (DSC) of one of directors with self attested identity proof of the same director. As the public limited company registration form is filed online so DSC of directors is needed. The DSC can be obtained by the certifying authority in India.
- Director Identification Number (DIN) that can be received by submitting the required documents of the director in the Ministry of Corporate Affairs. DIN can be obtained by filing an application with the id proofs of the director to be furnished to the Ministry of Corporate Affairs. Now, DIN for maximum 3 directors can be directly obtained through filing of public limited company registration form.
- It is very important to have a proper registered address for the company. All the important documents will be send by Registrar of Company (ROC) to this address only. This address need not be a commercial address only. It can be of residential address of any of the members.
- The company name should end with ‘limited’. Before heading for incorporation an application should be made to the ROC for name approval. The application of name approval should be filed with multiple names in order of preference of the names. The name application is filed in RUN (Reserve Unique Name) Form of the Ministry of Corporate Affairs.
- After the name approval, the company incorporation documents such as Memorandum of Association (MOA) and Articles of Association (AOA) should be put into effect by the members. Now these documents are in electronic form i.e. eMOA and eAOA.
- Once the eMOA and eAOA are prepared, they have to be submitted along with the incorporation form (SPICe) to the ROC.
- After verifying all the documents, ROC will issue the Certificate of Incorporation (COI). The ROC will also allocate a Certificate Identification Number (CIN) to the company which is registered.
- Once the above requirements are completed the members cannot start the business until the declaration should be made regarding the subscription money to be paid in 180 days by the directors.
Documents Required for Public Limited Company Registration?
- Copy of PAN card of directors
- Passport size photographs of directors
- Copy of Adhaar Card and Voter Id of directors
- Director identification number of all directors
- Digital signature of all directors
For Proposed Office
- Utility bill of Proposed Office
- Copy of property papers(if owned property)
- Copy of rent agreement(if rented property)
- Landlord NOC (No objection certificate)
What will be the Cost for Public Limited Company Registration?
The cost of registration of the company varies and it depends on the authorized capital of the company and the registered office address of the company.
What are the benefits of Public Limited Company?
Ø Raising of Capital by Issue of Shares Publicly
The company can issue share to public at large i.e. there is a more capital to reinvest back in the company.
Ø Expanding Shareholder Base and Spreading Risk
The large number of shareholder base helps in spreading the risk of company ownership among a large number of public at large. Also, there is no need to rely upon any one or two investors only. There is a huge number shareholder to invest in the company which will be helpful to the company.
Ø Growth and Development Opportunities
The large of capital investment in the company will help in growth of the company. With more capital the business can be expanded, new projects can be started, paying off debts.
The shareholders are able to buy and sell shares easily (if listed on stock exchange). The shareholders are less bound to remain with company this fact attract more investors for the company.
The addition of PLC after your company name will add more honor and prestige to you Companies name. It adds status to your company and the investors are more influenced by this.
The establishment of Public limited company is majorly done to generate a large number of capital from external sources i.e. general public coming for business together, global expansion, technological development. Hence, Public Limited Company registration is more suitable for investment rather other companies and more trustworthy.
Read our article:Advantage and Disadvantage of Public Company Registration