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Public ltd Company

A public limited company (PLC) is the legal designation of a limited liability company (LLC) that has offered shares to the general public and has limited liability. A PLC's stock is offered to the general public and can be acquired by anyone, either privately, during an initial public offering or through trades on the stock market.

A company that trades on the stock exchange. The shares can be traded and sold by any member of the public. It is governed by a set of strict regulations. They are required that they publish a true financial position so investors can determine the exact worth of any shares that they hold in the company.

Steps To Be Taken To Incorporate A New Company
  • Select, in order of preference, at least one suitable name upto a maximum of six names, indicative of the main objects of the company.
  • Ensure that the name does not resemble the name of any other already registered company and also does not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950) by availing the services of checking name availability on the portal.
  • Apply to the concerned RoC to ascertain the availability of name in eForm1 A by logging in to the portal. A fee of Rs. 500/- has to be paid alongside and the digital signature of the applicant proposing the company has to be attached in the form. If proposed name is not available, the user has apply for a fresh name on the same application.
  • After the name approval the applicant can apply for registration of the new company by filing the required forms (that is Form 1, 18 and 32) within 60 days of name approval
  • Arrange for the drafting of the memorandum and articles of association by the solicitors, vetting of the same by RoC and printing of the same.
  • Arrange for stamping of the memorandum and articles with the appropriate stamp duty.
  • Get the Memorandum and the Articles signed by at least two subscribers in his/her own hand, his/her father's name, occupation, address and the number of shares subscribed for and witnessed by at least one person.
  • Ensure that the Memorandum and Article is dated on a date after the date of stamping.
  • Login to the portal and fill the following forms and attach the mandatory documents listed in the eForm
To start a Public Limited Company You have to make sure :-
  • Minimum Seven person is needed to become the shareholder of the company.
  • No minimum capital is prescribed; it must be based on the business requirements.
  • One director of the company must be resident in India.
  • Name of the company should be unique.
The documents required are:
  • Identity Proof of all the directors and shareholders.
  • Address Proof of all the directors and the shareholders.
  • PAN Card of all the directors and shareholders.
  • Utility Bill of the office that you have proposed as your registered office for your Public Limited Company.
  • A No-Objection certificate from the landlord of your registered office.
  • DSC (Digital Signature Certificate) of the directors.
  • DIN (Director Identification Number) of all the directors.
  • Memorandum of Association.
  • The article of association.
MINIMUM REQUIREMENTS for Public Company Registration
  • 1. Minimum 7 Shareholders
  • 2. 2Minimum 3 Directors
  • 3. The directors and shareholders can be same person
  • 4. One of the Directors must be Indian Resident
  • 5. Minimum Authorized Share Capital Rs. 500,000 (INR Five Lac)
  • 6. DIN (Director Identification Number) for all Directors
  • 7. DSC (Digital Signature Certificate) for two of the Directors
ADVANTAGES & BENEFITS, Why to Register Public Limited Company!

• Limited Liability Protection to Directors personal assets
Many times business need to borrow money and take high investment decisions. Public Ltd. Company is the best option for entrepreneurs with larger investment requirements. In case of normal Partnerships, Partners personal savings and property would be at risk incase business is not able to repay its loans or business goes into loss. In a Public limited company, only investment in shares of the business is lost, personal assets of the directors are safe.

• Better image and credibility in Market
Public limited company is popular and well known business structure. Corporate Customers, Vendors and Govt. Agencies prefer to deal with Public Limited Company instead of proprietorship or normal partnerships.

• Easy to raise funds and loans
Public Limited Company can list itself in various stock exchanges in India and raise capital from stock market. Limited company also enjoys wide options to raise funds through bank loans, general public and Institutional investors.

• Favorite Business structure for Investors
Investors love to invest in Public Limited companies as it is well structured and transparent business structure.

• Easy Transfer of shares
Most important it is very easy to exit from a Public limited company, only shares of the company need to be handed over to the purchaser along with the signed share transfer forms.

• Most Suitable for Heavy Investment
Public Company is the best choice for businesses involving heavy investment.

There are several documentation required for registration of public limited company. But these are basic requirement to initiate:
  • 1. PAN card of each Director and Shareholder.
  • 2. Photographs of each Director and shareholder.
  • 3. ID Proof and Address proof of Director and Shareholder.
  • 4. Address proof of registered address of Company
A. A public limited company required a minimum capital of Rs. 5, 00,000. This amount is supposed to deposit by the shareholder in decided share percentage in the bank account of company. Then the same amount can be used by the company for its operations.
  • 1. Easy Funding by investors or through IPO of company.
  • 2. Shares of Public limited company are freely transferable.
  • 3. A great transparency in company is available.
  • 4. Best for long term vision of business.
  • 5. Very easily recognizable.
A. It normally takes 15-18 working days after submission of all requisite documents. But sometimes it may vary to 18-25 days also which depends of state of registration, as each state has its own Registrar of Companies(ROC) to register public limited company.
A. Public Limited Company is company which is always opt for where a huge investment is desired from public. Public company can go for the listing of its share at stock market as it has no limit on its number of shareholder and can fetch from public through IPO. After listing of share, shares of public limited company can be easily traded at stock exchange.
As a public limited company deals with public money, it has to make rather heavy compliances strictly, which are bulkier than those performed by a private limited company. Apart from the regular compliances related with income tax, there are many periodic and annual compliances to be made by a public limited company with ROC/MCA, SEBI, RBI, etc. These regulatory liabilities are in addition to securing and promoting steadily the profits and welfare of all shareholders of the public limited company.
In addition to enjoying all those features and facilities which a private limited company relishes, a public limited company is entitled to go public, issue its shares in the stock market, or accept public deposits. The following are the main and most significant exclusive features of a public limited company:
  • A public limited company can have a rather huge magnitude of capital, much more than that gathered by a private limited company.
  • It is legally authorized to trade on stock exchanges.
  • There is no limit to the maximum number of shareholders in a public limited company.
  • The shareholders of a public limited company have limited liabilities, limited roughly to the face value of the shares they own. Again, shareholders do not have to take part in the day-to-day management of the business of the company.
  • Shareholders of a public limited company are entitled to transfer their shares freely without needing consent of someone.
Distinction Between A Public Company And a Private Company – Following are the main points of difference between a Public Company and a Private Company :-

1. Minimum Paid-up Capital: A company to be Incorporated as a Private Company must have a minimum paid-up capital of Rs. 1,00,000, whereas a Public Company must have a minimum paid-up capital of Rs. 5,00,000.

2. Minimum number of members : Minimum number of members required to form a private company is 2, whereas a Public Company requires at least 7 members.

3. Maximum number of members: Maximum number of members in a Private Company is restricted to 50, there is no restriction of maximum number of members in a Public Company.

4. Transerferability of shares: There is complete restriction on the transferability of the shares of a Private Company through its Articles of Association, whereas there is no restriction on the transferability of the shares of a Public company

5 .Issue of Prospectus: A Private Company is prohibited from inviting the public for subscription of its shares, i.e. a Private Company cannot issue Prospectus, whereas a Public Company is free to invite public for subscription i.e., a Public Company can issue a Prospectus.

6. Number of Directors: A Private Company may have 2 directors to manage the affairs of the company, whereas a Public Company must have at least 3 directors.

7. Consent of the directors: There is no need to give the consent by the directors of a Private Company, whereas the Directors of a Public Company must have file with the Registrar a consent to act as Director of the company.

8. Qualification shares: The Directors of a Private Company need not sign an undertaking to acquire the qualification shares, whereas the Directors of a Public Company are required to sign an undertaking to acquire the qualification shares of the public Company

9. Commencement of Business: A Private Company can commence its business immediately after its incorporation, whereas a Public Company cannot start its business until a Certificate to commencement of business is issued to it.

10. Shares Warrants: A Private Company cannot issue Share Warrants against its fully paid shares, whereas a Private Company can issue Share Warrants against its fully paid up shares.

11. Further issue of shares: A Private Company need not offer the further issue of shares to its existing share – holders, whereas a Public Company has to offer the further issue of shares to its existing share – holders as right shares. Further issue of shares can only be offer to the general public with the approval of the existing share – holders in the general meeting of the share – holders only.

12. Statutory meeting: A Private Company has no obligation to call the Statutory Meeting of the member, whereas of Public Company must call its statutory Meeting and file Statutory Report with the Register of Companies.

13. Quorum: The quorum in the case of a Private Company is TWO members present personally, whereas in the case of a Public Company FIVE members must be present personally to constitute quorum. However, the Articles of Association may provide and number of members more than the required under the Act.

14. Managerial remuneration: Total managerial remuneration in the case of a Public Company cannot exceed 11% of the net profits, and in case of inadequate profits a maximum of Rs. 87,500 can be paid. Whereas these restrictions do not apply on a Private Company.

15. Special privileges: A Private Company enjoys some special privileges, which are not available to a Public Company.

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