Overview of Public Limited Company Registration
Public limited companies enjoy all the rights of a corporate entity with limited liabilities and it is an ideal choice for the small and medium scale enterprises who wish to raise the equity capital from the general public.
Basic Clarification on Incorporation of Public Limited Company
Just like other companies, Public Limited Company is also registered as per the rules and regulations of the Companies Act, 2013. A public Company enjoys the benefits of limited liabilities for its members and has rights to sell its shares for raising the capital of the company. It can be incorporated with a minimum number of three directors and has more stringent rules and regulations as compared to a Pvt. Ltd. Company.
It must have a minimum number of seven members whereas there is no limit for the maximum number of members. It provides all the benefits of a private limited company along with more transparency and easy transferability of ownership and shareholding. Name, shares, formation, number of members, management and directors, etc differentiates any Public limited company from the private limited companies.
Benefits of Public Limited Company Registration
Here are the benefits provided to the company with Public Limited company registration
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Limited liabilities for the shareholders of the company
Shareholders of the public company enjoy the benefits of limited liabilities under which their assets are safe and cannot be used to clear the debts and losses of the company. Despite of it, the shareholders are responsible for their own legal offenses. All the members, directors and shareholders enjoy this right and their assets cannot be seized by any bank, creditors or government bodies.
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Perpetual Succession
A public limited company is considered as a corporate body that has perpetual succession. Means in case of death, retirement, insanity, and insolvency of one or more members/ shareholder/ directors, the company still continue its existence.
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Improved capital of the company
In a public limited company, the general public is invited to buy the shares of the company. Hence, anyone can invest in a public company that improves the capital of the proposed company.
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Borrowing Capacity
A public company can enjoy unlimited sources for borrowing funds. It can issue equity, debentures and can accept the deposits from the general public by selling its shares. Moreover, most of the financial institutions find public companies more prominent than other unregistered companies.
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Fewer risks
Since public companies can sell their shares to the public, it lesser the scope of unsystematic risks of the market.
Better opportunities for growth and expansion of the company:
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Fewer risks lead to better opportunities so that the company can grow and expand by investing in new projects from the funds raised by selling its shares in the market.
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Documents Required for Public Limited Company Registration
An applicant has to collect all these documents to file along with the incorporation application:
Features of Public Limited Company Registration
Here are some important features of Public Limited Company:
- Number of Directors in the company
As stated in the provisions of Companies Act, a public company must have a minimum number of 3 directors to incorporate a company whereas there is no restriction on the maximum number of directors.
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Name of the Company
All the Public limited companies must add “Limited” word at the end of their name. it is denoted as an identity of a public company.
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Prospectus of the Company
Prospectus of the company is mandatory for the public limited companies. It is issued by the proposed company for its general public. It is a note of comprehensive statements of works and affairs of the company. However private companies have no such compliances as they don’t have rights to invite the public for their shares.
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Paid-up Capital
As per the requirements of the act, no minimum capital required for the registration.
What is the difference between the Public limited Company and Private Limited Company?
There are various points of differences between both these companies. Here are some chief differences between both:
|
Point of difference |
Public Limited Company |
Private Limited Company |
|
Members |
Minimum: 7 Maximum: No Limit |
Minimum: 2 Maximum: 200 |
|
Directors |
Minimum: 3 |
Minimum: 2
|
|
Public invitations |
Yes |
No |
|
Minimum Capital Income |
No |
No |
|
Issuance of Prospectus |
Required |
Not Required |
|
Name differences |
Must have “Limited” at the end of its name |
Must have PVT LTD at the end of its name |
|
Mandatory Statutory Meeting |
Yes |
No |
|
Managerial Remunerations |
There are no as such restrictions |
Cannot exceed the limit of 11/% of the net profit |
|
Stock Exchange |
Is listed on stock exchange and stock trade is carried out publicly. |
Not listed on stock exchange neither carry out stock trade publicly. |
Public Limited Company Registration Procedure
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Step 1: Apply for the Digital Signature Certificate
First of all, you have to apply for the Digital Signature Certificate for all the proposed directors in the company. DSC is used to sign the e-forms and is an authentic and safe method to file all the documents on an electronic platform. It is a mandatory document.
A director can easily obtain DSC from the nearest Certifying Authorities or CAs with self-attested coppices of their identity proof. It takes around 1 -3 working days to obtain a DSC.
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Step 2: Name Verification
The third step involves name registration of the company. You can check the name availability through the MCA portal by following this step
Visit the MCA Portal> select the MCA services> Click Check Company Name
Note: The company name should not be taken or registered and should not be similar to a brand name.
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Step 3: Filing Form SPICe+
Once the company’s name has been approved you can now file the SPICe+ form to avail the company incorporation certificate. Along with it, you have to file all the required documents such as MOA (Memorandum of Association) and AOA (Article of Association). These two documents contain the details of the mission, objectives, aims, visions, business activities, responsibilities of all the directors and shareholders and definition of the proposed company.
All the documents and applications are further verified by the higher authorities and it takes around 7 to 9 working days.
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Step 4: Obtaining Certificate of Incorporation
Once all the applications and document to have been received to the authorities and they have verified it, the company would receive the Certificate of Incorporation which will include CIN and date of incorporation.
Requirements for the Public Company Registration
According to the provisions of Companies Act, 2013 here are the requirements you need to fulfill to incorporate a Public company in India:
Frequently Asked Questions
In addition to having all the benefits and privileges that come with being a private limited company, a public limited corporation has the option of going public, issuing stock, or taking deposits from the general public. The primary and most important distinguishing characteristics of a public limited company are as follows:
- A public limited company can have significantly more capital than a private limited company can.
- It is legally permitted to trade on stock markets.
- A public limited corporation can also have an unlimited number of shareholders.
- The obligations of shareholders in a public limited company are roughly capped at the face value of the shares they possess. Once more, shareholders are not required to participate in the daily management of the company's operations.
- Public limited company shareholders have the right to transfer their shares without another person's permission.
