Let's talk!
public ltd company
-
What is Public Limited Company?
Before proceeding to public limited company registration let’s understand what does it exactly means.
As per Section 2 (71) of the Companies Act public company means a company which-
(a) is not a private company;
(b) has a minimum paid-up share capital * as may be prescribed:
Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles.
Benefits of Registering a Public Limited Company in India
- Limited liability to shareholders
- A public Limited company can raise additional capital by issuing more shares or debentures.
- Greater borrowing power.
- A board of directors with experience/ expertise can be appointed.
- Shareholders can sell/transfer their shares freely.
Conditions for Registering a Public Company in India
Minimum Directors / Members
Minimum 7 Members and 3 Directors are required to Register a Public Limited Company.
Maximum Number of Directors and Members
Maximum Number of Directors is 50 and Maximum number of Members is unlimited
Resident Director
As per Section 149(3) of Companies Act 2013 at least one director should be resident of India satisfying the conditions of total stay prescribed by Government.
Minimum Capital Requirement
Minimum Capital Requirement for a Public Limited Company is Rs. 5 Lakh.
Name of Company
The suggested name must be unique and should not be related to any other existing Company.
Registered office of Company
The Registered office should be Commercial space. No Objection Certificate of Landlord is necessary in case of Rented Office.
Steps involved in Registering a Public Limited Company
- Apply for Digital Signature Certificate
- Apply for Director Identification Number (DIN)
- Apply for Name availability online with MCA Website
- Filing of Memorandum of Association and Articles of Association online
- Apply for PAN and Tax Deduction Account Number (TAN)
- Issue of Certificate of Incorporation by ROC with PAN and TAN
- Open Bank Account in the name of the Company
Statutory Requirement to Register a Public Ltd Company
- DIN or Directors Identification Number of all the designated directors is mandatory for public limited company registration.
- DSC or Digital Signature Certificate of the designated directors
- Memorandum of Association (MOA) and Article of Association (AOA)
Documents Required to Register a Public Limited Company
For Public Limited Company registration in India all Shareholders and Directors needs to produce identity proof and address proof. List of documents accepted by the Ministry of Corporate Affairs (MCA) are given below:
- Copy of PAN Card or Passport of directors (Foreign Nationals & NRIs)
- 2 Passport size photograph of directors of the company
- ID proof such as Aadhaar Card or Voter identity card of directors
- PAN card details of all the directors and shareholders
- Copy of address proof rent agreement or property papers
- Utility bill such as telephone, gas, water or electricity bill of the registered office as a residential proof of the business place. It should not be older than 2 months.
- A NOC or No Objection Certificate from the landlord of the business place.
- In the case of personal property, a copy of sale deed or property deed
For Foreign Nationals
It is mandatory for Foreign Nationals to submit notarized copy of the passport. The residence proof documents like a bank statement or electricity bill must be less than two months old.
Proof of Registered Office
In India a Company must have a registered office to get company registration. In order to show that the registered office is working , a recent copy of the electricity bill or the property tax receipt or water bill must be submitted. Along with the rental agreement, utility bill, or the sales deed and a letter from the landlord with her/his consent to be used to register the particular address as the registered office.
Advantages of Public Company Registration
- Limited Liability of the shareholders
In Public limited Company registration, the liability of the shareholder and Directors is limited to the extent of the shares they hold in the company. For example, if the company suffers from any financial contingencies because of primary business activity, then in such case personal assets of shareholders and Directors will not be snatched by the Banks, creditors, and government.
- Raising the capital through Public Issue
In the case of Public Company Registration, the proposed company can raise funds through the Public.
- Separate Legal Entity
Shareholders and Directors may come and go, but the existence of the company continues to exist. i.e. the absence or movement of any shareholder in the company will not affect the existence of the company.
- Unlimited source of raising fund
The company has an unlimited source of raising fund through Public which results in pursuance of new projects and for capturing the new market
- Easy Transferability
The shares of a public limited company are easily transferable. Shares of the company are listed on a stock exchange; the shareholders find it is easy to transfer the share in the company. In the case of Public Company Registration, shareholders are less bound to remain with the company, which results in making people more willing to invest.
- Maintains the Transparency
Because of Public involvement, the company publishes its statutory details and reports to maintain greater transparency and also to provide accurate information of its current financial position.
- Maintains the Brand Position
Being registered as a Public Company, it improves the brand position of the Company. Listing the shares of the company in the stock exchange enhances the brand position and reputation of the company.
Disadvantages of Public Company Registration
- Lack of Flexibility
Flexibility always acts as strength to every organization, but in the case of the public company, there is no such advantage. Every public company is bind by the rules and regulations, which results in a lack of flexibility in its operations.
- Lack of secrecy
To maintain the transparency and trust of the shareholders, the company provides full disclosure to the public due to which secrecy cannot be maintained. The Public is involved in decision making, the company cannot maintain the secrecy.
- Suitability
A public limited company is only favourable to large scale a business which is a disadvantage to small scale industries.
- High Costs
- Public limited Company registration requires a huge cost. To start a public company huge investment, time and procedural things are required to be complied with. The profit of the company depends upon the investment you have done.
Takeaway
Every aspect has its pros and cons. The advantage of the PLC is visible to all; some disadvantages of the public company cannot be ignored. Public company registration offers shares to the public at large, which provides better business opportunities. The registration of public company offers additional opportunities which generate revenue through selling the new shares in the public.