Public Limited Company Registration
A public company can gain greater access to the market as compared to a private company by selling more and more shaves. Since the shares of a public company are freely transferable.
Why register the company as public limited?
It is suitable for businesses that require huge capital to register a public limited company. Minimum seven members are required to form a public company and maximum there is no limit. Also, a minimum of 3 directors are required to form such a company and there’s no cap on the maximum.
It is mandatory for all public limited companies to obtain registration under the Companies Act, 2013. Also, such companies are required to add the word “limited” after their name.
After registration, a public limited company can exercise all the functions like that of any other company registered under this act. Such companies can enter into a contract, can sue & be sued, can hold or dispose of the property in its own name. A company will have its separate existence and perpetual succession.
If the company doesn’t get itself register under the Companies Act, 2013 then such company is void in the eyes of law.
Registration has its own benefits. A public company can avail of the benefits of business credibility and shares transferability. Also, registration helps in availing certain tax benefits. After registration, the public limited company has to comply with strict regulations and is required to disclose the true condition of its financials for its shareholders.
Such registration offers various opportunities to generate more funds from the public through selling the shares to the general public. The company can raise unlimited funds through public. Such funds can be applied towards various projects and to grab new markets.
Benefits of a public limited company
A public limited has tons of benefits and the owners can get many perks such as:
- Shareholder liability is limited: In a public limited company the liability of shareholders/members are limited to the extent of shares hold by them in the company. Meaning, if the company suffers any contingencies, then shareholders are not personally liable to pay for such contingences as their liability is limited.
- Transparent affairs: Greater transparency is present in case of public companies as public is involved. So the financials of such company are prepared to disclose the true affairs of the company. The company publishes its statutory details and other details as may be prescribed.
- The benefit of transferability: Shares of a public limited company are freely transferable. Since the shares of the company are listed on a recognized stock exchange the shareholders can easily transfer the shares in the company. Because of this feature, more people prefer to invest in a public limited company.
- Separate entity: The public limited company has its own existence. Shareholders or directors may come or go but the company will remain. Because it is treated separate from its members, the existence of the company is not affected by the existence of the shareholders.
- Raising funds through public issue: Public issue is not allowed incase of private companies but public Issue is the main advantage of a public limited company. A public company can raise money through public issue via inviting general public to subscribe in the shares of the company.
- Good brand position: Since the shares of public limited companies. are listed on the stock exchange, this listing helps in creating good brand image & reputation in the market. This helps in attracting more investors to invest in the company.
- Many financial opportunities: A public limited company particularly one which is listed can get many financial opportunities. Banks and other financial institutions may provide extended credit to such companies.
- Growth opportunities: The public company has more growth opportunities as compared to private companies with respect to:
- Entering into a new market
- Carrying new projects
About the public limited company registration
A public limited company formed with a minimum of 7 members and maximum no limits. The shares of public limited company are freely transferable. The shareholders of a public company have limited liability and they are not liable to pay personally to the debts of the company.
The public company has to comply with stringent rules and regulation as public money is involved in it. The liquidation of the public company is also per the law and regulation. The public company has its own existence and such existence is not affected by the death or insolvency of the shareholders.
Shares of a public limited company are listed on stock exchanges. Such shares are freely transferable. The affairs of a public company are transparent as such the company has to comply with laws & regulation to present true details of their financial statements.
The businesses that requires huge capital can raise funds by forming a public limited company.
Requirements for a public limited company registration:
To register a business as public limited, following are the things to keep in mind
- Minimum 7 members and 3 directors are required to register as a public limited company. Such members can be individual, companies or LLPs but in case of director only individuals can become directors of a public limited company. A director can be the shareholder of the company. It is not compulsion for the person to become shareholder to eventually become the director of the a public company.
- The directors are required to obtain director identification number also called as DIN.
- Requirements of digital signature certificate (DSC) of one of the director at the time of submission of address and identity proof.
- In order to select the name of the company an application is to be made in the prescribed form.
- Such application is required to submit at the ROC along with the memorandum and articles of the company.
- The company will be required to pay a prescribed fee to the ROC and ROC will issue the certificate of commencement of the business.
Procedure for public limited company registration:
Following are the procedures to be followed:
- Digital signature certificate (DSC): Since complete registration is done online, therefore, there will be a need for a digital signature to fill various forms. DSC is mandatory for all subscribers and proposed directors.
- Director identification number (DIN): The director of a public limited company is required to obtain DIN which is an identification number of the director.
- Registration on the portal of the Ministry of Corporate Affairs (MCA): Prescribed forms in the prescribed format are required to be submitted on the portal after the incorporation process is completed. The directors can get access to view all public documents on such a portal.
- Certificate of Incorporation: After all the formalities the registration application is submitted along with prescribed documents. ROC will cross check the application and documents will issue the certificate of incorporation of the public limited company.
Documents to be submitted
Following are the documents required to be submitted to register a public limited company:
- ID Proof of all the members and directors
- Address proof of all members and directors
- PAN of all members and directors
- NOC from the landlord where the registered office of the company is situated.
- Director Identification Number (DIN)
- Digital Signature Certificate (DSC)
- Memorandum of Association (MOA)
- Articles of Association (AOA)