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Business Registration

Public Limited Company

A Public Limited Company is a type of business entity that offers shares to the general public and has limited liability. Public Limited Companies are governed by the Companies Act, 2013, and are considered separate legal entities distinct from their shareholders. Public Limited Companies are suitable for large-scale businesses and are subject to stringent regulatory requirements due to their public nature. They offer several features and benefits, making them an attractive option for businesses seeking to raise capital from the public and enhance credibility in the market.

Features of Public Limited Company:

Limited Liability: Similar to Private Limited Companies, Public Limited Companies offer limited liability protection to their shareholders. The liability of shareholders is limited to the extent of their shareholding in the company, protecting their personal assets from business liabilities and obligations.
Separate Legal Entity: Public Limited Companies are separate legal entities distinct from their shareholders. They can enter into contracts, own assets, incur debts, and sue or be sued in their own name, providing legal recognition and credibility in the market.
Capital Formation: Public Limited Companies have the ability to raise capital from the general public by issuing shares through public offerings. This facilitates large-scale capital formation, allowing companies to finance expansion, investment in new projects, research and development, and other business initiatives.
Listing on Stock Exchanges: Public Limited Companies have the option to list their shares on recognized stock exchanges, such as the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE). Listing provides liquidity to shareholders, enhances visibility, and allows for price discovery of the company's shares in the secondary market.
Transferability of Shares: Shares of Public Limited Companies are freely transferable, allowing shareholders to buy and sell their holdings in the open market. This liquidity feature enhances investor confidence and facilitates capital mobilization for the company.
Minimum Subscription Requirement: Public Limited Companies must meet a minimum subscription requirement for their shares to be issued to the public. This ensures that there is sufficient investor interest and capital commitment before the company can proceed with its public offering.

Benefits of Public Limited Company:

Access to Public Capital: Public Limited Companies have access to a vast pool of capital from the investing public through public offerings. This enables companies to raise funds for expansion, investment in new projects, research and development, and other business initiatives.
Enhanced Credibility and Trust: Registering as a Public Limited Company enhances credibility and trustworthiness among investors, customers, suppliers, and stakeholders. The stringent regulatory requirements, corporate governance practices, and transparency standards associated with Public Limited Companies signal professionalism and reliability in the market.
Liquidity of Shares: Listing on recognized stock exchanges provides liquidity to shareholders by enabling them to buy and sell their shares in the secondary market. This liquidity feature enhances investor confidence and facilitates investment in the company's shares.

Checklist of Documents Required for Public Limited Company Registration:

Identity Proof: PAN card, Aadhar card, passport, or driver's license of the directors and promoters.
Address Proof: Utility bills, bank statements, or rent agreements as proof of address for the registered office of the company.
Consent and Declaration: Consent and declaration forms signed by the directors and promoters.
Digital Signature Certificate (DSC): DSC of the directors for online filing of documents.
Prospectus: A prospectus containing information about the company's operations, financials, management, and terms of the public offering (applicable for public offerings).

Steps Involved in Public Limited Company Registration Process:

Name Reservation: Apply for reservation of the company name through the RUN (Reserve Unique Name) service or SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus).
Drafting MOA and AOA: Draft the MOA and AOA of the company as per the prescribed format and content requirements.
Obtaining DSC: Obtain Digital Signature Certificates (DSC) for the directors for online filing of documents.
Filing Incorporation Documents: File SPICe+ or INC-32 form along with the MOA, AOA, and other required documents with the Registrar of Companies (ROC).
Payment of Fees: Pay the requisite incorporation fees and stamp duty (if applicable) for the registration of the Public Limited Company.
Minimum Subscription Requirement: Ensure that the minimum subscription requirement for shares is met as per regulatory guidelines.
Listing on Stock Exchanges (Optional): If opting for listing, apply for listing of shares on recognized stock exchanges and comply with the listing requirements.
Prospectus Approval (For Public Offerings): Obtain approval from regulatory authorities for the prospectus containing details of the public offering (if applicable).
Certificate of Incorporation: Once the ROC verifies the documents, issues the Certificate of Incorporation, and assigns the Corporate Identity Number (CIN) to the company.
Opening Bank Account: Open a bank account in the name of the Public Limited Company and deposit the initial capital contribution.
Compliance with Statutory Requirements: Ensure compliance with statutory requirements, such as filing of prospectus (if applicable), GST registration, tax filings, and annual compliances.

Time Involved in Public Limited Company Registration:

The time involved in Public Limited Company registration depends on factors such as the availability of the company name, preparation of documents, filing of forms, approval from the ROC, and, if applicable, approval for the public offering and listing on stock exchanges. Generally, the process can be more time-consuming compared to other forms of companies due to the additional regulatory requirements. It may take approximately 30 to 45 working days or more to complete the registration process, subject to the timely submission of documents and compliance with regulatory requirements. Delays may occur due to scrutiny of documents, approval processes, and compliance verification, but efficient handling by professionals can expedite the process.

Additional Points:

One Resident Director: A prerequisite is that at least one director must be an Indian resident, as per the Companies Act, 2013.
Unique Name: The public limited company’s name must be distinctive and should not resemble or be confusingly similar to any other company or brand, as per regulatory guidelines.
Property Ownership: As a separate legal entity, a Public Limited Company has the authority to buy, possess, and sell property in its own name. Shareholders cannot claim any of the company’s assets as long as the firm remains operational.
Minimum Capital Requirement: Public Limited Companies do not have a specific minimum capital requirement for incorporation. The capital structure of the company is outlined in its Memorandum of Association (MOA) and Articles of Association (AOA).

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