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Public Limited Company

A Public Limited Company under Company Act 2013 is a company that has limited liability and offers shares to the general public. It’s stock can be acquired by anyone, either privately through (IPO) initial public offering or via trades on the stock market. A Public Limited Company is strictly regulated and is required to publish its true financial health to its shareholders.

What is a Public Limited Company?

A Public Limited Company is defined under Section 2(71) of the Companies Act, 2013 as:

a company which is not a private company
a company with a minimum paid-up share capital of INR 5 lakhs.

Note : Under the Companies Act, 2013, a subsidiary company shall be deemed to be a public company if it is not a subsidiary to a private company, even if it is a private company as per its articles.

What are the Requirements for Incorporating a Public Limited Company?

Minimum Paid-up share Capital	INR 5 lakhs
Minimum number of Directors	3
Maximum number of Directors	50
Minimum number of Shareholders	7
Maximum number of Shareholders	No Limit

Documents required for incorporating a Public Limited Company

Passport sized photographs of all the Directors
Copies of the Identity documents of all the Directors- Aadhar Card, Voter Card, PAN card
DSC (Digital Signature Certificate) of all the Directors
DIN (Director Identification Number) of all the Directors
In case the office is in a rented property – the rent agreement
In case the office is an owned place – the property ownership documents
The water bill and the electricity bill of the business place
No Objection Certificate by the Landlord
Memorandum of Association (MoA)
Articles of Association (AoA)

It is necessary that all the documents pertaining to registration of a Public Limited Company are in order to avoid any legal complications later on.

Requirements/Process for registration of Public Limited Companies

There are various rules and regulations prescribed under the companies act, 2013 for the formation of a public limited company. Here is what you should keep in mind when registering a public limited company:

Minimum 7 shareholders are required to form a public limited company
Minimum of 3 directors is required to form a public limited company
The minimum share capital of Rs. 5 lakhs is required
Digital signature certificate (DSC) of one of the directors is needed while submitting self-attested copies of identity and address proof.
Directors of the proposed company will need a DIN
An application is required to be made 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, duly filled Form DIR – 12, Form INC – 7 and Form INC – 22 is needed
Payment of the prescribed registration fees to the ROC is required
After obtaining an approval from the ROC, the company should apply for the ‘certificate of business commencement.’

Advantages

Separate Legal Entity :

A Public Limited Company is considered as a separate legal entity from its shareholders. It has a perpetual existence and can have its own PAN, bank accounts, approvals, contracts, licenses, assets and liabilities.

Multiple avenues of funding :

Public Limited Company can raise funds from individuals as well as from financial institutions. The funds may be raised via equity shareholding, preference shareholding or debentures.

Easy transferability of shares :

This is one of the biggest advantages of a Public Limited Company. The shares can be easily transferred by a shareholder to other legal entities – be it an individual or an organization, in India or abroad. The directorship of the company can also be changed for ensuring business perpetuity.

Limited liability :

The shareholders of a Public Limited Company are given Limited Liability Protection. In a situation of unexpected liability, the same would be limited only to the company and not affect the shareholders.

FREQUENTLY ASKED QUESTIONS

How many peoples are required to incorporate a limited company?

To incorporate a Limited Company, a minimum of seven people are required. A Limited Company must have a minimum of three Directors and seven shareholders.

What are the requirements to be a Director?

The Director needs to be over 18 years of age and must be a natural person. There are no limitations in terms of citizenship or residency. Therefore, even foreign nationals can be Directors in a Indian Private Limited Company.

What is the capital required to start a Limited Company?

You can start a Limited Company with any amount of capital. However, fee must be paid to the Government for issuing a minimum of shares worth Rs.5 lakhs [Authorized Capital Fee] during the incorporation of the Company. There is no requirement to show proof of capital invested during the incorporation process.

Is an office required for starting a Limited Company?

An address in India where the registered office of the Company will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.

Do I have to be present in person to incorporate a Limited Company?

No, you will not have to be present at our office or appear at any office for the incorporation of a Limited Company. All the documents can be scanned and sent through email to our office. Some documents will also have to be couriered to our office.

What are the documents required for incorporation?

Identity proof and address proof is mandatory for all the proposed Directors of the Company. PAN Card is mandatory for Indian Nationals. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof.

How long will it take to incorporate a Company?

The time taken for incorporation will depend on submission of relevant documents by the client and speed of Government Approvals. To ensure speedy incorporation, please choose a unique name for your Company and ensure you have all the required documents prior to starting the incorporation process.

How long is the incorporation of the Company valid for?

Once a Company is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and maybe struck off from the register after a period of time. A struck-off Company can be revived for a period of upto 20 years

What is Director Identification Number (DIN)?

Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.

What is authorized capital fee?

Authorized capital of a Company is the amount of shares a company can issue to it shareholders. Companies have to pay the Government an authorized capital fee to issue shares in a Company. Companies have to pay authorized capital fee for a minimum of Rs.5 lakhs.

What are the statutory compliances required for a Limited Company?

A limited company must hold a Board Meeting atleast once in every 3 months. In addition to the Board Meetings, an Annual General Meeting must be conducted by the Private Limited Company, atleast once every year.

Can NRIs / Foreign Nationals be a Director in a Limited Company?

Yes, a NRI or Foreign National can be a Director in a Limited Company after obtaining Director Identification Number. However, atleast one Director on the Board of Directors must be a Resident India.

Can NRIs / Foreigners hold shares of a Limited Company?

Yes, NRIs / Foreign Nationals / Foreign Companies can hold shares of a Limited Company subject to Foreign Direct Investment (FDI) Guidelines.

What are FDI Guidelines for Foreigners in a Limited Company?

100% Foreign Direct Investment is allowed in India in many of the industries under the Automatic Route. Under the Automatic Route, only a post-investment filing is necessary with the RBI indicating the nature of investment made. There are a few industries that require prior approval from the RBI, in such cases, approval must first be obtained from RBI prior to investment.