How to Start a PUBLIC LTD COMPANY REGISTRATION

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Public Limited Company Registration – An Overview

A Public Limited Company (PLC) is an ideal business structure for entrepreneurs aiming for large-scale ventures, such as setting up IT infrastructure or establishing manufacturing plants. While many entrepreneurs today prefer registering a Private Limited Company, those who wish to raise capital from the public by issuing shares should opt for a Public Limited Company.

A Public Limited Company offers all the benefits of a corporate entity along with the advantage of Limited Liability. It is a suitable choice for businesses that plan to expand significantly and require access to public funds. Some well-known examples of Public Limited Companies include TATA Steel Limited, Reliance Communications Limited, among others.

What is a Public Limited Company?

A Public Limited Company is governed by the provisions set out in the Companies Act, 2013. It allows members to enjoy Limited Liability and provides the ability to raise capital by issuing shares to the public.

To incorporate a Public Limited Company, a minimum of three directors and seven shareholders are required. The definition of a PLC is outlined under Section 2(71) of the Companies Act, 2013.

According to the Companies (Amendment) Act, 2015, there is no longer a minimum capital requirement for registering a Public Limited Company.

Though the rules and regulations governing a Public Limited Company are more stringent than those for a Private Limited Company, it remains a preferred business structure for many. This is due to its benefits, such as the easy transferability of shares and ownership, which make it an attractive option for businesses seeking public investment.

Additionally, a subsidiary company of a Public Limited Company will be treated as a Public Company, even if its Articles of Association list it as a private company.

Benefits of Public Limited Company Registration

Here are some key advantages of registering a Public Limited Company:

1. Limited Liability
The liability of shareholders is limited to the unpaid amount on their shares, protecting personal assets from the company's debts.

2. Preferential Treatment by Banks
Public Limited Companies are often given higher preference by banks when applying for loans, compared to other business structures.

3. Easy Transfer of Shares
Shareholders have the flexibility to transfer or sell their shares with ease, enhancing liquidity and ownership flexibility.

4. Listing on Recognized Stock Exchanges
With compliance to regulatory requirements, a Public Limited Company can list its shares on recognized stock exchanges, providing access to a wider pool of investors.

5. Perpetual Succession
A Public Limited Company enjoys perpetual succession, meaning its existence remains unaffected by the death, retirement, insolvency, or insanity of any member.

6. Enhanced Capital
By offering shares to the public through a prospectus, a Public Limited Company can raise significant capital, boosting its financial resources.

7. Reduced Risks
Selling shares to the public helps distribute the company’s risks, minimizing the impact of market fluctuations and reducing the exposure to unsystematic risks.

  1. Basic Features of a Public Limited Company

    Here are the key features of a Public Limited Company:

    1. Number of Directors and Members
    To incorporate a Public Limited Company, a minimum of three directors and seven members are required.

    2. Company Name
    A Public Limited Company must include the word "Limited" as a suffix to its name. This signifies its identity as a Public Limited Company.

    3. Separate Legal Entity
    A Public Limited Company is a separate legal entity, meaning it has a distinct legal existence, separate from its members or shareholders.

    4. Company's Prospectus
    The issuance of a prospectus is mandatory for a Public Limited Company. This document provides detailed information about the company's business and objectives, and its primary purpose is to raise capital from the public. Unlike Public Limited Companies, Private Limited Companies are not required to issue a prospectus, as they are not permitted to raise funds from the general public.

    5. Paid-up Share Capital
    According to the Companies Act, 2013, there is no minimum capital requirement for registering a Public Limited Company.

    6. Limited Liability
    Members of a Public Limited Company benefit from limited liability. This means their liability is restricted to the unpaid amount on their shares, protecting their personal assets from company debts.

    7. Transferability of Shares
    In a Public Limited Company, members have the right to transfer their shares, offering greater flexibility in ownership.

    Prerequisites for Public Limited Company Registration

    To register a Public Limited Company, the following requirements must be met:

    1. A minimum of seven shareholders is needed for incorporation.
    2. A minimum of three directors is required.
    3. At least one director must obtain a Digital Signature Certificate (DSC) to sign documents electronically.
    4. All directors must acquire a Director Identification Number (DIN).
    5. An application must be submitted, outlining the company’s main Object Clause, which details the company’s business activities post-incorporation.
    6. The application, along with the required documents like the Memorandum of Association (MOA) and Articles of Association (AOA), must be submitted to the Registrar of Companies (ROC).

      For obtaining registration of Public Limited Company the following documents must be provided:

      1. Identity Proof in the form of PAN Card, Aadhaar card, Voter ID, Driving License of all the directors and shareholders.
      2. Address Proof of all the directors and shareholders of the said company.
      3. Utility bill in the form of telephone, water, gas, or electricity bill of the said registered office. This will act as a residential proof for the place being used as Registered Office. However, it must not be older than two months. 
      4. A No-Objection Certificate (NOC) from the actual landlord of the place being used as Registered Office.
      5. Directors Identification Number (DIN) of all the directors.
      6. Get Digital Signature Certificate (DSC) of the directors.
      7. Memorandum of Association (MOA) and Article of Association (AOA).
 
 
 
 
 

Steps Involved in Incorporating a Public Limited Company

Here’s a step-by-step guide to the process of incorporating a Public Limited Company:

1. Obtain DSC and DIN
The first step is to obtain a Digital Signature Certificate (DSC) for at least one of the company’s directors. This is required for signing documents electronically, and it is issued by a certifying authority.

Additionally, all directors must obtain a Director Identification Number (DIN). This process has been simplified by the Ministry of Corporate Affairs (MCA), as directors can now apply for a DIN by filing the SPICe form.

2. Apply for Company Name
The next step involves checking the availability of the company name. The proposed name must be unique and not already registered. This can be done by visiting the MCA portal and using the name availability check feature. It is essential to ensure that the name complies with naming guidelines and is not already in use.

3. Filing Form SPICe+
Once the name is approved, the applicant can proceed with filing the SPICe+ form to apply for the Certificate of Incorporation. Along with this form, the applicant must submit the Memorandum of Association (MOA) and Articles of Association (AOA). These documents define the company's objectives, business activities, and the roles and responsibilities of its directors and shareholders.

4. Obtain Certificate of Incorporation
After the application and documents are verified by the authorities, the company will receive its Certificate of Incorporation (COI). This certificate will include the company’s Corporate Identification Number (CIN) and the date of incorporation.

5. Apply for PAN and TAN
Once the company is incorporated, the next step is to apply for the Permanent Account Number (PAN) and Tax Deduction Account Number (TAN). These are required for tax and financial purposes and can be obtained by filing an application with the MCA.

6. Open a Bank Account
After receiving the PAN and Certificate of Incorporation, the company can open a bank account in its name. The PAN card and COI serve as essential documents for opening the bank account.

These steps help set the foundation for legally establishing and operating a Public Limited Company.

Difference between Public Ltd Company and Pvt Ltd Company

Point of Difference Public Limited Company Private Limited Company
Minimum Members A minimum of seven members are required A minimum of two members are required
Minimum Directors A minimum of three directors are required A minimum of two directors are required
Maximum Members Unlimited A maximum of two-hundred members are allowed
Minimum Capital No minimum amount is required for capital No minimum amount is required for capital
Invitation to Public Yes, can invite the public to subscribe to shares No, cannot invite the public to subscribe to shares
Issue of Prospectus Yes, must issue a prospectus to raise capital No, not required
Quorum at Annual General Meeting (AGM) Minimum of five members required Minimum of two members required
Certificate for Commencement of Business Yes, required to obtain a Certificate of Commencement of Business No, not required
Suffix Used in the Company Name "Limited" "Private Limited"
Managerial Remuneration No restriction on managerial remuneration Cannot exceed more than 11% of the Net Profits
Statutory Meeting (Mandatory) Yes, a Statutory Meeting is compulsory No, a Statutory Meeting is not compulsory

Frequently Asked Questions

A minimum of 3 directors and 7 shareholders are required to incorporate a Public Limited Company in India.

Any individual who is 18 years or older is eligible to become a director in a Public Limited Company. Additionally, NRIs (Non-Residents of India) or foreign nationals can also serve as directors in a Public Limited Company.

No, it is not required for anyone to be present in person at our office, as the entire process of obtaining Public Limited Company registration is fully online. You only need to send us your documents, and our team will take care of the rest.

Yes, an NRI or a foreign national is eligible to serve as a director of a Public Limited Company.

No, you do not need to hire a full-time CA (Chartered Accountant) or CS (Company Secretary), as our team offers an Annual Compliance Package that ensures you receive accurate and timely advice.

Typically, our experts require a span of 15 business days to register a Public Limited Company in India.

A Digital Signature Certificate (DSC) is an electronic signature certificate issued by a Certifying Authority. It is used to digitally sign documents and forms.

The Director Identification Number (DIN) is a unique identifier assigned by the Ministry of Corporate Affairs to each director. It is a compulsory requirement for an individual to serve as a director of a company. A director is allotted only one DIN, which remains valid for a lifetime.