Public Limited Company Registration
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Introduction
A Public Limited Company is a corporate structure that allows ownership to be offered to the general public through the issuance of shares. It is governed by the Companies Act, 2013 and can be classified into two categories: Listed Public Companies and Unlisted Public Companies.
To incorporate a Public Limited Company, certain legal requirements must be fulfilled, such as having a minimum of seven members along with the prescribed documentation and compliances. This form of business structure offers several advantages, including limited liability, greater access to capital, financial flexibility, and ease of share transferability.
This article provides a comprehensive overview of Public Limited Companies, covering their types, eligibility requirements, documents needed, registration procedure, benefits, and key considerations to help you understand and choose this structure effectively.
What is a Public Limited Company?
A Public Limited Company is a business structure in which ownership is held by the general public through freely tradable shares. These shares can be bought and sold by individuals, enabling investors from diverse backgrounds to participate in the company’s growth by investing in its equity. To incorporate a Public Limited Company, a minimum of seven members is required, while there is no maximum limit on the number of shareholders.
In India, Public Limited Companies are governed by the Companies Act, 2013 and are subject to stricter legal and regulatory requirements compared to Private Limited Companies. The day-to-day operations are managed by the Board of Directors, who act on behalf of the shareholders. Key decisions are made through a voting mechanism, where each shareholder exercises voting rights based on their shareholding. The appointment and election of the Board of Directors are also carried out by the shareholders, ensuring transparency and democratic management within the company.
Types of Public Limited Company
A Public Limited Company is broadly classified into two types: Listed Public Limited Company and Unlisted Public Limited Company. The key differences between the two are explained below:
Listed Public Limited Company
A Listed Public Limited Company has its shares listed on one or more recognized stock exchanges. This enables easy buying and selling of shares by the general public through the stock market. Since the shares are freely tradable, investors enjoy high liquidity and broader market exposure. Listed companies are subject to strict regulatory oversight and public scrutiny, which enhances transparency and investor confidence.
Unlisted Public Limited Company
An Unlisted Public Limited Company does not have its shares listed on any stock exchange. Although its shares are transferable, the process is less convenient and less liquid compared to listed companies. These companies face relatively fewer regulatory and disclosure requirements and are not under the same level of public scrutiny. Due to limited liquidity and restricted share transferability, investors generally prefer listed public limited companies over unlisted ones for their flexibility and ease of exit.
Documents Required for Public Limited Company Registration
To incorporate a Public Limited Company, the following documents are required:
Identity Proof: Valid identity proof of all shareholders and directors, such as Aadhaar Card, PAN Card, Passport, or Voter ID.
Address Proof: Residential address proof of all directors and shareholders.
Company’s Registered Address Proof: Proof confirming the company’s registered office address, such as a utility bill (electricity, water, gas, or telephone) not older than two months.
Digital Signature Certificate (DSC): DSC of all directors is mandatory for filing online forms with the MCA.
PAN Card Details: PAN details of all directors, shareholders, and members are required.
Consent Letter / NOC: If the registered office is on rented premises, a No Objection Certificate (NOC) from the property owner permitting the company to operate from the address is required.
Constitutional Documents: Copies of the company’s Memorandum of Association (MOA) and Articles of Association (AOA), outlining the objectives and internal regulations of the company.
Public Limited Company Registration Procedure
The procedure for registering a Public Limited Company, whether listed or unlisted, remains the same. Below are the key steps involved in the incorporation process:
Step 1: Obtain DSC and DIN
The first step is to obtain a Digital Signature Certificate (DSC) for all proposed directors and subscribers to the Memorandum of Association (MOA) and Articles of Association (AOA). Thereafter, a Director Identification Number (DIN) must be obtained for each proposed director.
Step 2: Reserve the Company Name
After securing the DSC and DIN, the next step is to apply for name reservation. The proposed name must be unique and compliant with MCA naming guidelines. Name availability can be checked and reserved through the MCA portal.
Step 3: File the SPICe+ Incorporation Form
Once the name is approved, the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form is filed. This form covers all incorporation requirements and must be submitted along with the MOA and AOA and other necessary documents.
Step 4: Issuance of Certificate of Incorporation
The Registrar of Companies (ROC) reviews the submitted application. Upon successful verification and approval, the ROC issues the Certificate of Incorporation, officially establishing the Public Limited Company.
Step 5: Open a Company Bank Account
After incorporation, a bank account must be opened in the company’s name to manage all financial transactions and deposit the share capital.
Step 6: Complete Other Statutory Registrations
Depending on the nature of the business, additional registrations may be required, such as GST registration, Import Export Code (IEC), and other industry-specific licenses, to commence operations legally.
Benefits of Public Limited Company
Registering a Public Limited Company offers several advantages, which are outlined below:
Limited Liability:
Shareholders of a Public Limited Company enjoy limited liability, meaning their personal assets are protected from the company’s debts and unforeseen financial obligations. Their risk is limited to the amount invested in the company.
Easy Transfer of Shares:
Shares of a Public Limited Company can be freely transferred through buying and selling, making it easier to attract investors and enhance liquidity in the market.
Greater Flexibility in Ownership:
A Public Limited Company requires a minimum of seven shareholders, with no maximum limit. This flexibility allows the company to expand its ownership base without restrictions.
Access to External Funding:
Public Limited Companies can raise substantial capital by issuing shares to the public and by utilizing various financial instruments, making it easier to fund business expansion and large-scale operations.
Key Consideration for Public Limited Company
Before applying for Public Limited Company registration, certain key points should be carefully considered:
Minimum Directors:
A Public Limited Company must have at least three directors. There is no maximum limit on the number of directors that can be appointed.Company Name Requirement:
Whether listed or unlisted, a Public Limited Company must include the word “Limited” or “Ltd.” at the end of its name. This indicates that the company is legally recognized as a public entity.Preparation of a Prospectus:
A Public Limited Company is required to prepare a prospectus, which outlines the company’s business activities, objectives, and financial position. This document plays a crucial role in informing and attracting potential investors.
