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Public Limited


A Public Limited Company is a Company limited by shares in which there is no restriction on the maximum number of shareholders, transfer of shares and acceptance of public deposits. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. However, the liability of a Director / Manager of such a Company can at times be unlimited. The minimum number of shareholders is 7.

Advantages Of Public Limited Company

A public limited company is a company that is able to offer its shares to the public. Advantages of a public limited company would include; profits are bestowed upon the company's shareholders, there is improved national insurance benefits, easy to transfer interest in business through ownership of shares.

A public limited company is a form of business organization that operates as a separate legal entity from its owners. It is formed and owned by shareholders. Shares of a public limited company are listed and traded at a stock exchange market freely. Shareholders of a public limited company are limited to potentially lose only the amount they have paid for the shares they own.

  • Tax burden reduces Sole traders and partners in a partnership pay income tax while companies pay corporation tax. While corporation tax rates are lower than income tax rates the advantage may lie with incorporation.
  • Continuity of existence A public limited company is not affected by death of one of its shareholders, but her shares are transferred to the next of kin and the company continues to run its business as usual. In the case of a director's death, an election is held to replace the deceased director.
  • Capital Public limited companies enjoy an increased ability to raise capital since they can issue shares to the public through the stock market. They can also raise additional capital by issuing debentures and bonds through the same market from the public. Debentures and bonds are unsecured debts issued to a company on the strength of its integrity and financial performance.
  • Transfer of Shares is easy You can transfer Shares of a public limited company are bought and sold in a stock exchange market. They are freely transferable between its members and people trading in the stock exchange.
  • Limited Liability Share holder liability for the losses of the company is limited to their share contribution only. This is what makes it a separate legal entity from its shareholders. The business can be sued on its own and not involve its shareholders. The company does not belong to any person since one person can own only a part of it.

Pre – Requisites For Registration Of Public Limited Company

  • Min. three directors (Indian/ NRI/ Foreigner).
  • Min. seven share holders/ promoters (individual/ body corporate).
  • Min. authorized capital should be Rs. 5,00,000/-
  • DIN (director identification number) for all directors.
  • DSC (digital signature certificate) for any one director.
  • Registered address (owned/ rented).

NOTE: The directors can also be the share holders.

Documents Required For Registration Of Public Limited Company

  • Memorandum of Association (MOA)
  • Articles of Association (AOA)
  • Letter of Authority/PoA
  • Form1

Documents Required:

  • Completed Professional Letter of Engagement
  • Passport size photograph (one for each director) for minimum 2 proposed Directors
  • Any ONE Document to evidence Proof of Identity (List A) and Proof of Address (List B) from each proposed Director

List A Identity Proof

  • Passport
  • Voter's ID
  • Driving License
  • Photo PAN Card(Mandatory)

List B Address Proof

  • Passport
  • Voter's ID
  • Driving License
  • Life Insurance Policy
  • Electricity Bill
  • Telephone (Landline/Mobile) Bill
  • Bank Account Statement

Major Steps Involved In Registration Of Public Limited Company

Step I : Getting DIN
DIN can be obtained by making an application online. All the existing and intending Directors have to obtain DIN within the prescribed time-frame as notified in Sections 266A to 266G of Companies (Amendment) Act, 2006.

Step II : Getting DSC
Digital Signature can be obtained from any of the Certifying Authorities in India. It is required as all the filings done by the companies under MCA21 e-Governance programs are need to be filed online with the use of Digital Signatures by the person authorized to sign the documents.

Step III : Pre- Name Application Search

  • The Promoters have to provide atleast 6 (Six) names in the order of priority.
  • To make an online search of availability of names as desired by the Promoters

Step IV : Drafting Of MOA & AOA

MOA is a document that sets out the constitution of the company. It contains the main objectives, incidental/ ancillary objectives for the attainment of the main objectives, other objectives and the scope of activity of the company and also describes the relationship of the company with the outside world.

AOA contains the rules and regulations of the company for the management of its internal affairs. It states the authorized share capital of the proposed company and the names of its first/ permanent directors.

NOTE : While the Memorandum specifies the objectives and purposes for which the Company has been formed, the Articles lay down the rules and regulations for achieving those objectives and purposes.

Step V : Representations before RoC on behalf of Promoters
Changes to be made in the Name application, if any, suggested by the RoC

Getting Certificate of Incorporation

The ROC will issue Certificate of Incorporation after careful review of documents submitted in the above stated steps. Section 34(1) cast an obligation on the ROC to issue a Certificate of Incorporation, normally within 7 days of the receipt of documents. A Public Limited Company can start its business immediately on receiving the Certificate of Incorporation.

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