Public Limited Company

As per Company Act 2013, a Public Limited Company is “a company that has limited liability and may offer shares to the general public by Initial Public Offer (IPO). Where the company is listed, an individual can also acquire the shares of such a company via stock market”.

Elements of Public Ltd Company
This type of company is apt for small and medium scale enterprises who want to raise equity capital from the general public. It also has the right to sell its shares for raising the capital for the company.

  • Directors & Shareholders
  • Must have a minimum of 3 directors and 7 shareholders, and there is no restriction for the maximum number of members.
  • Liability
  • Enjoys the benefits of limited liabilities for its members, although they are liable to any amount less or equal to the amount invested by them.
  • Paid-up Capital
  • The minimum share capital of Rs 5 lakh or such a higher amount is required at the time of registration.
  • Prospectus
  • As a Public Limited Company can invite the general public to subscribe to its shares, it must issue a prospectus; a comprehensive statement that states the works and affairs of the company.
  • Name
  • All the Public limited companies must add the “Limited” word at the end of their name as it represents the identity of a public company.

Benefits of Public Ltd Company

  • The Separate Legal Entity – A company is a legal entity or you can say an artificial person that can own property and also incur debts in its own name and shareholders are not at all liable for such debts.
  • The Effective Capital Break-up – Anyone can invest in a public limited company that facilitates the creation of effective capital break-up. Also, it eliminates the unsystematic risk of the market.
  • The Attention Rate - Listing of the company on the stock market ensures the attention of mutual funds, hedge funds, and other traders to take note of the business of the company. It not only provides better opportunities but also improves the credibility of the company.
  • The Potential Opportunities - The company can always grow and expand its business operation by issuing IPOs, and calculating risks.

Requisites for the Registration of Public Limited Company
For the registration, a company must have 3 directors and 7 shareholders, and also necessary to meet these requisites:

  • An application for the selection of the name of the company.
  • An application comprising the main object clause of the company is to be made. This object clause will define what a company will pursue after its incorporation.
  • Submission of the application to ROC along with the required documents like MOA, AOA, Form INC – 7, Form INC – 22, duly filled Form DIR – 12.
  • Payment of the prescribed registration fees to the ROC is required. And after gaining approval from the ROC, the company should apply for the ‘certificate of business commencement.

Documents for the Incorporation of Public Limited Company
To avoid legal compliances, it must submit all the necessary documents, which include:

  • Copies of the Identity Documents of all the Directors along with passport-sized photographs- Aadhar Card, Voter Card, PAN Card.
  • DSC (Digital Signature Certificate) & DIN (Director Identification Number) of all the Directors
  • In case the office is a rented property - The rent agreement & NOC by the landlord.
  • In case the office is an owned place- the property ownership documents.
  • Utility bill of the proposed registered office of the company
  • Memorandum of Association (MOA)
  • Articles of Association (AOA)

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