Public Ltd Company Registration in India

An Overview

A Public Limited Company also referred to as a PLC, is a company structure that offers shares to the general public. It is unlike other structures of businesses such as sole proprietorships or traders or private limited companies where the company is separate from the owners, which protects the owners from debts and liabilities. They are all owned by shareholders and managed by directors.

Directors:

As per the Companies Act, 2013, a public limited company requires a minimum of 3 directors to start, with a maximum limit of 15 directors.

Limited Liability:

Shareholders in a public limited company enjoy limited liability. This means that shareholders are not personally responsible for the company’s losses or debts beyond the amount they have invested. However, this limited liability does not shield shareholders from legal consequences for their individual unlawful actions.

Share Capital:

A public limited company is not mandated to have a minimum paid-up capital but should maintain an authorised share capital of at least Rs. 1 lakh.

Prospectus:

Public limited companies are obligated to issue a prospectus under the Companies Act. A prospectus is a comprehensive document disclosing the company’s affairs and is intended for the public. Private limited companies, in contrast, are not required to issue a prospectus as they cannot invite the public to subscribe to their shares.

Name:

The Companies Act mandates that all public companies must include the word ‘limited’ in their name.

 

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    Procedure For Public Limited Company Registration In India:

      • Step 1: Fulfill all legal requirements, including the number of directors, shareholders, and minimum paid-up capital.
      • Step 2: Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN) for directors.
      • Step 3: Register the company’s address with the Registrar of Companies (ROC) and pay registration fees based on authorized capital.
      • Step 4: Apply for company name approval through the Ministry of Corporate Affairs using the RUN form.
      • Step 5: Execute Memorandum of Association (MoA) and Articles of Association (AoA) once the name is approved.
      • Step 6: Submit prepared documents to ROC for verification.
      • Step 7: Upon verification, ROC registers the company and issues the incorporation certificate (CIN).
      • Step 8: Apply for a certificate of commencement within 180 days, stating all subscribers have paid the subscription money.

    Requirements for Public Limited Company Registration:

      • Minimum 7 shareholders and 3 directors.
      • Minimum share capital of Rs.5 lakh.
      • DSC for one director and DIN for all directors.
      • Application for company name selection.
      • Submission of documents including MOA, AOA, Form DIR-12, Form INC 7, and Form INC -22.
      • Payment of prescribed registration fees.
     

    Benefits of Public Limited Company Registration:

      • Separate legal entity with perpetual existence.
      • Multiple avenues for funding.
      • Easy transferability of shares.
      • Limited liability for shareholders.
      • Growth opportunities with a vast capital base.
      • Board of Directors controls the company.
     

    Annual Compliances for Public Limited Company:

       1. Unlisted Company:

      • Minimum 4 board meetings.
      • Appointment of cost auditor (CRA 2 filing).
      • Returns of deposits (Form DPT 3).
      • Appointment of CFO/CS/CEO (Form MGT 14 or Form DIR 12).
      • Annual General Meeting (AGM) for dividend declaration.
      • CSR Committee meetings.
      • Director’s disclosure (Form MBP 1).
     

      2. Listed Company:

      • AGM (Form MGT-15 filing).
      • Financial Statements (Form AOC 4).
      • Annual Return (Form MGT7).
      • Financial and Director’s Report (Form MGT 14).
      • Income Tax Returns (ITR 6 by September 30th).
      • Secretarial Audit Report (Form MR 3).
      • Compliance with SEBI regulations.
      

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    Critical Characteristics of Public Limited Companies (PLCs)

    Strategic Capital Access

    Unlock growth potential by accessing capital from public markets through Initial Public Offerings (IPOs).

    Enhanced Credibility

    Public Limited status enhances corporate credibility, fostering trust among investors, partners and stakeholders.

    Liquidity Share Trading

    Facilitating liquidity for shareholders with freely tradable shares, promoting an active and dynamic market for the company’s stock.

    Robust Governance Framework

    Establishing a robust structure of governance, ensuring compliance with legal and regulatory standards, and fostering transparent and responsible business practices.

    1limited

    Limited Liability

    Members are only liable for the number of shares they hold. In the event of any loss to the Company, shareholders may be responsible only for their claims. No shareholder’s assets are at risk.

     
    2fund

    For Raising Funds

    It is vital for fast-growing businesses that seek venture capital funding (VC) to register as a private limited company because only private limited companies can offer these investors shares and seats on the board of directors.

     
    3capital

    Paid-up Capital

    Minimum capital for a Private Limited Company must be Rs. 1 lakh or such a greater amount as the government prescribes from time to time. There is, however, no such requirement under the recent amendment.

     
    4perpetual

    Perpetual Succession

    In the eyes of the law, the Company continues to exist even if one of its members passes away, becomes bankrupt, or is insolvent. In other words, the Company’s life continues forever.

     

    FAQs on Public Limited Companies in India

    A: A Public Limited Company is a type of business entity where shares are publicly traded on the stock exchange, allowing for widespread ownership.

    A: A Public Limited Company in India must have a minimum of seven shareholders.

    A: While there is no specific minimum capital requirement, the company must issue shares with a minimum face value as prescribed.

    A: It is typically managed by a Board of Directors elected by shareholders, with distinct roles like CEO, CFO, and Company Secretary.

    A: Yes, the shares of a Public Limited Company are freely transferable, allowing shareholders to buy and sell them on the stock exchange.

    A: Public Limited Companies must adhere to stringent compliance standards, including filing annual reports, conducting regular board meetings, and complying with regulatory guidelines.

    A: Yes, a Public Limited Company can raise funds by issuing shares to the public through Initial Public Offerings (IPOs).

    A: Shareholders benefit from the liquidity of their shares, potential dividends, and the ability to influence company decisions through voting at general meetings.

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