In this blog, we have discussed about the features, advantages and the benefits of forming a public limited company in India according to the user perspective.Public limited company registration is the most predominant types of company formation in India.
The public limited companies are registered or incorporated under the companies act, 2013 contains many special features for the business people. It can be the most preferred choice of business, if you are planning to raise funds from the general public through Initial public offering (“IPO”) because these public companies are privileged under the Securities Laws to access Capital Market.
As a result, the public companies are also considered to be more transparent business model compared to other business structures. It gives investors great features of transferring their ownership in the company without any hassle by just selling the shares. Public Limited Companies are the destination point for Foreign Direct Investment (“FDI”). Because, they are the areas open for public limited companies to attract foreign loans and equity participation under the foreign investment laws.
Features of public companies:
Public Limited Companies have following features:
- It allows a substantial degree of separation between the operations and ownership.
- One can provide stock ownership to employees.Moreover, Limited companies are allowed to this feature of distributing their stocks among the employees.
- In fact, Public Limited Companies can list its shares on Indian Stock Exchanges such as National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and so on.
- Only Public Limited Companies are allowed to Deposits from public under Companies Act, 2013.
Advantages of Public limited companies:
- Ease to issue shares to the publics.
- Reliability in the worth of shares.
- Able to implement the policies of distribution of workload.
- The control system helps a lot in building a team work
- Able to raise large capital
- Easy to have the business growth while using funds for the public.
Besides there are more benefits in registering the company as public limited. Capital raised from the public is the initial kind of safe source of capital which is permanent and no need pay interest. It is easy from a company to grow its business while using the same raised funds where the roles and the obligations of the management is limited.
Public companies requirements:
Public Limited Company is company which is the best choice where a huge investment is desired from public. Moreover, these companies can go for the listing of its share in the stock market as it has no limit on its number of shareholder and can fetch from public through IPO. After listing of shares, public limited company can be easily traded at stock exchange.
Apart from regular agreement of Income Tax, there are heavy compliances that a public company need to fulfill. Among the registered business entity, public limited company have the maximum compliance as it involves public money. Minimum capital of a Public limited company is Rs. 5, 00,000. This amount is supposed to deposit by the shareholder in a definite share percentage in the bank account of the public company. Further, this amount can be used by the company for its operations.
Public limited companies Act:
An existing company must have less than the required minimum paid-up share capital. However, the paid-up capital is increased at least to the level of the prescribed sum of Rs.1 lakh or Rs.5 lakhs. The company name can be affected from the register of companies maintained by the Registrar. Therefore, the company or its member or any creditor can approach the Court for its revival under s.560 (6) by producing evidence in support of enhancement of the paid-up share capital of the company.
Besides, It appears that the provision is considered to made in sub-section (5) may not be in public interest. It may cause hardship to the creditors of the company struck off. These conditions do not applicable to a section 25 company or a company not having any share capital. Under Section 12 of the companies Act, a public limited company registration can be with 7 or more persons associated for any lawful purpose. Consequently, to form a public limited company only minimum number of persons are required. There is no limit on the maximum number of its members.
Public limited company Vs Private Limited Company:
Moreover, A company is called Private limited company when all its shares lies in Private hands. It owned by a group of promoters. On the other hand, the public limited company shares are open to everyone. As a result, The company is not in the hands of promoters but the public owns it. In Private companies, the minimum number of shareholders can be two and the maximum it can be 50. On the other hand, the minimum number of shareholders is seven for public limited companies and there is no limit to the maximum number of shareholders.
Shares of the companies:
When talking of shares, the shares features can be easily transferred in a Public Limited Company whereas it is not possible in a Private Limited company. Private Ltd Company cannot offer shares to the public. On the contrary, public companies can make a public offers through advertisements. The shares of a public companies are listed in the stock exchange whereas it is not in the case of Private Limited Company. This means that trading happens with a public company in the stock exchange and nothing of that sort happens with a private company.
In essence, A Private Limited company is a partnership firm where as Public Limited company is a complete corporate body. The Public Limited companies come with strict rules and requirements. On the other hand, no such rules or requirements applicable for a private limited company.
Procedure of registration of public limited company:
- DSC of the directors
- DIN of the directors
- Preparation of INC- 29
- (Including Name reservation, various declarations, MOA/AOA Registration)
- Filing of INC -29
- Wait for approval from ROC
Documents required for Public limited companies:
| No. | Documents Required for Registering |
| 1. | PAN card copy with Self-attestation. |
| 2. | Latest passport size photo in jpg. |
| 3. |
Copy of Non Objection Certificate
(NOC) from the owner of the property. |
| 4. |
If owned property, a copy of Sale Deed and Electricity bill is
sufficient. |
| 5. |
Voter Id copy or Passport copy or Aadhar card copy or Driving license
copy with self-attestation. |
| 6. |
Copy of Electricity bill or Property Tax receipt or Water Tax
receipt not older than two months. |
| 7. |
Utility bill has to be provided of the particular country where the
NRI or Foreign national resides and it should be notarized. |
| 8. |
Latest Bank account statement or Mobile /Telephone bill or
Electricity Bill (not older than two months) – no need for self-attestation. |
| 9. |
For the registered office proof of the company, if the property is rented/
leased, then copy or rental agreement or lease agreement. |
| 10. | In case of NRI or Foreign national, Passport copy has to be notarized at the Indian Embassy of the particular country. |
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