Public Limited Company
A public limited company is a publicly traded entity that offers its shares to the public through a stock exchange or over-the-counter market.
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Overview
A Public Limited Company is governed by the Companies Act 2013. A Public Limited company can issue shares to the public at large and raise money from the market. Its Stock can be acquired either by Initial Public Offering (IPO) or by stock trading. There are strict rules & regulations formulated by the Companies Act for Public Limited Companies. Unlike a private limited company, which restricts the transfer of shares and limits the number of shareholders, a public limited company offers its shares to the general public, allowing anyone to become a shareholder.
Minimum 7 Shareholders
Minimum 3 Directors
Minimum Paid up Capital of Rs 5 Lakhs
Compulsory for a Public Company to add the word “Limited” at the end of its name
Required Documents For Public Limited Company
Promoters
PAN Card of each Director & Shareholder
Address Proof (Driving License, Passport, Aadhar Card)
Latest Residence Proof (Electricity Bill, Water Bill, Gas Bill, and Bank Statement)
Passport Size Photograph of each Director & Shareholder
Office Premises
Latest Electricity Bill, Gas Bill of Office Premises
NOC from Owner /Rent Agreement
Benefits Of Public Limited Company
Transferability and Exit Options
Public limited companies provide better liquidity to shareholders as their shares can be freely traded on stock exchanges. This makes it easier for shareholders to exit their investments by selling their shares to interested buyers.
Greater Investor Confidence
Public limited companies often enjoy higher investor confidence compared to other forms of business entities. Transparency in financial reporting, regulatory oversight, and the availability of information allows investors to make informed investment decisions.
Access to Capital
Public limited companies have the opportunity to raise significant capital by issuing shares to the public. They can go for initial public offerings (IPOs) or subsequent offerings to raise funds for expansion, research, and development, acquisitions, or other business activities. Public companies often find it easier to attract investments from institutional investors and the general public.ows investors to make informed investment decisions.
Enhanced Governance and Regulatory Compliance
Public limited companies are subject to stricter governance and regulatory requirements. This fosters a culture of transparency, accountability, and ethical practices within the organization. Complying with regulations helps build investor confidence and trust, which can lead to increased investment and business opportunities.
Minimum Requirements
A public limited company must have at least seven shareholders, and there is no maximum limit on the number of shareholders. Additionally, it must have a minimum of three directors, with at least one director being a resident of India.
Succession Planning and Perpetual Existence
Public limited companies have perpetual existence, meaning they can continue to operate even if the shareholders change. This provides stability and continuity to the business and facilitates succession planning. Public limited companies can outlast the involvement of their founders and continue to thrive under new leadership.
Process
ExploreDigital Signature Certificate (DSC)
1
Persons who will be acting as a director and shareholders of the proposed company, need to apply for DSC. It is required to sign and validate all the documents.
Name Approval
2
Proposed name needs to be approved by ROC. ROC will check the name availability on different parameters and then will issue the approval letter.
Company Incorporation
3
Once the name is approved, the application needs to be made for the formation of the Company in Form Spice+ and the same is verified by a professional CA, CS or CMA.
Drafting of MOA & AOA
4
Along with Spice+, the MOA & AOA of the Company also need to be filed. A Memorandum of Association (MOA) defines the fundamentals of the company and the Articles of Association (AOA) contains the rules & regulations of the Company.
Incorporation Certificate
5
After verification of Spice+, Roc will issue the Certificate of Incorporation. Incorporation Certificate gets issued within 3-4 working days.
PAN & TAN Allotment
6
With a certificate of incorporation pan and tan allotment will be made and a soft copy of pan and tan will be received by mail from the Department.
Opening Bank Current Account
7
After receiving COI and other relevant documents, Private Limited can open the bank’s current account in the name of the Company.
Compliances
First-time Compliance
After company incorporation, it needs to comply with the following list of Compliances with MCA
Commencement of Business (INC 20A) - This needs to be filed within 180 days of Company Formation, once the Bank account is opened and the share application money is trans-ferred into that account.
Share Certificate Franking and Stamping – Company needs to issue a share certificate to all the shareholders and needs to be stamped.
Auditor Appointment – This Needs to be done within 30 days of Company Formation after holding an Annual General Meeting.
Yearly Compliances
All company Pvt ltd, OPC, Public limited are bound to file ROC and Income Tax compliance after end of each financial year i.e 31st March within prescribed timeline mentioned in Income tax and companies act. Major compliance forms details and due dates are mentioned below:-
| Form | Due Date | Particulars |
|---|---|---|
| ADT 1 | Within 15 days of AGM | For appointment of company auditor (CA). |
| AOC 4 | Within 30 days of AGM | For financial report to ROC (Balance sheet and Profit/loss statement). |
| MGT 7 | Within 60 days of AGM | For annual reporting of company to ROC related to share holders and other matters of company. |
| DPT 3 | 30th June | To report existing loan on Company. |
| DIR 3 | 30th September | For Director KYC. |
| ITR | 30th September | For Income tax return of the company. |
Note: Annual general meeting (AGM) need to be held between company officials and Shareholders by and before 6 month of the end of each Financial Year.
Comparision
Private Limited Company vs Public Limited Company
| Private Limited Company | Public Limited Company | |
|---|---|---|
| Ownership | Owned by a small group of shareholders | Owned by numerous shareholders |
| Number of Shareholders | Limited to a maximum number of shareholders | Unlimited number of shareholders |
| Share Transfer | Restricted transfer of shares among shareholders | Freely transferable shares |
| Minimum Capital Requirement | No minimum capital requirement | The minimum capital requirement may be mandatory |
| Public Offering of Shares | Shares cannot be publicly traded or offered to the public | Shares can be publicly traded or offered to the public |
| Disclosure Requirements | Less stringent disclosure requirements | More stringent disclosure requirements |
| Board Composition | Flexible in terms of board composition | Often requires independent directors on the board |
| Decision-Making | Easier decision-making process among shareholders | Decision-making involves more shareholder involvement |
| Legal Formalities | Fewer legal formalities | More legal formalities and regulatory compliance |
| Confidentiality | Information can be kept private and confidential | Information is subject to public disclosure |
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