Defining a Public Limited Company Registration

What is a Public Limited Company?

A Public Limited Company is a Limited Liability Company that offers shares to the public.

The Company Act 2013 defines rules for a public limited company under which the most crucial aspect is Online Public Limited Company Registration. Its stock can be obtained by anybody in the general public, either privately through Initial Public Offering (IPO) or through trades in the stock market.

A company in which securities are traded to the public on a stock exchange and can be bought and sold by anyone from the general public is defined as a Public Limited Company. These companies have strict rules and regulations with regards to sharing their financial position, they need to ensure that they publish their true financial report so that the investors can ascertain the true worth of the stock (shares). They are also called a publicly held company.

Public Limited Company Registration Process

Any company before its incorporation needs to follow some crucial steps to register the company. In that way, they can legally start business operations. The Companies Act mentions some steps for registering a Public Limited Company in India.

Steps to be followed to start a Public Limited Company

• Obtain DSC and DIN- In order to complete the Company Incorporation Form on the official MCA portal, the applicant must obtain DSC along with revenues for DIN application.
• Name Reservation– The next step is to secure name approval by filing an application in e-Form RUN and ensure the name’s availability. At this step, the company can recommend two names along with the prescribed fees of Rs 1000.
• Filling Incorporation Form– This step demands the applicant to fill-up one application in Form SPICE 32 for the incorporation of a Public company by attaching all the important documents.
• TAN, PAN, and Bank Account Application– After receiving the Public Limited Company Certificate of Incorporation, the last step is to apply for PAN & TAN and Bank Account opening.

Features of a Public Limited Company

• Members: A minimum of 7 members is mandatory in order to start a public limited company. However, the maximum number of members is limited to the number of shares available.
• Perpetual Succession: This means that the company is a separate entity which is different from its members. The death, insolvency of any of its members does not affect the company and they continue to function.
• Limited Liability: The liability of the shareholders of the company is limited to the number of shares they hold. They have the right to sell their shares at any time period without any notice.
• Transferability of shares: Shares of a public limited company are purchased and sold in a stock exchange market. They have the feature of transferability which means they can be easily transferred.
• Board of Directors: A minimum of 3 and a maximum of 12 members are required to be the board of directors who will lead the company as the main head.
• Logo: The Company has its own distinct logo. The company is required to use this logo in its all types of operations and functions.
• Minimum Subscription: Minimum Subscription is the amount received by the company which is 90% of the shares issued within a certain period of time. If the company does not receive 90% of the amount, then they cannot commence the business and carry out any business activities.
• Voluntary Association: The entry into the company as well as the exit from the company (known as the exit strategy) can be easily done. The shareholders can transfer the shares and leave the company.

Eligibility criteria for a Public Limited Company

• Minimum shareholders: To incorporate a Public company, a minimum number of 7 members or shareholders are a requirement. However, there is no upper limit for the maximum number of the shareholder.
• Minimum Directors: A minimum of 3 and a maximum of 12 directors are important to start a public limited company.
• Company Name: It is compulsory for a Public Limited Company to have the suffix “Limited” at the end of the company name. Also, the Name must be unique and not identical to the registered trademark.
• Company Objects/Objectives: Objectives of a company must be defined clearly and it must specify the appropriate proposed business activities. The objects of a company are basically the goals, vision and business plan. They must be legal and multiple objects can be accepted.
• Registered Office Address: The company has to submit a permanent business address proof and ownership proof at the time of application filing for Public company registration.
• Digital Signature Certificate: DSC is a must for the purpose of the online filing of the documents with the Registrar of Companies. It serves as a proof and the authenticity of the document.
• Minimum paid-up capital: A minimum paid-up capital is not a mandatory requirement at this stage.

Advantages of a Public Limited Company

• Raising capital through public issue of shares.
• Expanding the shareholder base and therefore equally distributing the risk which minimizes it to occur to one individual
• Growth and expansion opportunities
• The liability of the owners and the shareholders is limited to the number of shares they hold.
• Shares can be easily transferred without complicated procedures.
• The borrowing capacity is high
• Possibility of Foreign Direct Investment

Documents required for Public Limited Company Registration

• Copy of the PAN card of the Directors
• Passport Size Photographs of the Directors
• Aadhaar card or identity card
• If the property is rented, a Rent agreement copy must be submitted
• For self-owned property –property pares must be submitted
• Residential proof (Water bill or Electricity bill)
• NOC (No Objection Certificate) from the owner
• DIN and DSC of all the members
• Memorandum of Association (MOA) and Articles of Association(AOA)

Active and Non-Active Directors in a Public Limited Company

The concept of active directors and non-active directors in a public limited company is not mentioned and pre-defined. Executive directors and non-executive directors are the only active members of the company. Executive directors are those members who are paid remuneration. Their major responsibilities include taking care of certain operational areas of the company like purchase, sales, marketing.

On the other hand, non-executive directors are not paid remuneration but are paid fees for attending some important meetings. Their responsibilities include sharing expertise, giving advise and providing assistance to the Board of Directors.

Source: https://medium.com/@singhparul/defining-a-public-limited-company-dc50f14b2007