Public Limited Company
Introduction
A Public Limited Company (PLC) is a business structure that offers ownership to the general public through the sale of shares. Governed by the Companies Act, 2013, a PLC can be classified into two types: Listed and Unlisted.
To establish a Public Limited Company, certain requirements must be fulfilled, such as having a minimum of seven members. Additionally, forming a PLC offers several benefits, including:
- Limited Liability: Protects shareholders from personal liability beyond their investment.
- Financial Flexibility: Easier access to capital through public investment.
- Easy Share Trading: Shares can be freely traded, enhancing liquidity and investor confidence.
In this article, you’ll find comprehensive details about Public Limited Companies, covering:
- Types of Public Limited Companies
- Documents Required
- Registration Procedure
- Key Benefits
- Important Considerations
Explore everything you need to know about setting up and managing a Public Limited Company, and make informed decisions for your business journey.
What is a Public Limited Company?
A Public Limited Company is a type of business structure in which the general public holds the ownership of the company. This ownership is based on traded shares of the company. These shares can be exchanged among individuals in order to buy or sell the equity. Public Limited Company allows individuals from various fields to invest in their company’s shares. To start a public limited company minimum 7 members are required, however, there is no upper limit on the number of members or shareholders.
Public Limited Company is governed by the Companies Act, 2013 in India and it has strict laws and regulations as compared to Private Limited as its day-to-day operations are managed by the board of directors after approval of members or shareholders. To make any decision in a Public Limited Company, voting rights are given to each shareholder. Also, the selection of Board of Directors is dependent on these shareholders through the election.
Types of Public Limited Company
A Public Limited Company is majorly divided into two categories as Listed Company and Unlisted Company. Following is the detailed difference between listed and unlisted company:
1. Listed Public Limited Company:
A Listed Public Limited Company has listed its shares for trading purpose on one or more stock exchanges which allows easy transfer of shares among individuals. The transfer of Listed Public Companies Shares can be bought and sold to any company directly offers investors a diverse exposure as well.
2. Unlisted Public Limited Company:
Unlisted Public Limited Company does not have listed shares on stock exchange like Listed Public Limited Company. The shares are transferable but not as easy as in Listed Companies. As a result companies are not able to experience the same public scrutiny or regulatory requirements. Thus, Public prefer more Listed Public Limited Companies for its flexible nature rather than Unlisted Companies.
Documents Required for Public Limited Company Registration
To start a Public Limited Company certain documents are needed and they are as follow:
- Identity Proof: An Identity proof of all shareholders and directors is required. It can be an Aadhaar Card, PAN Card, or Voter ID.
- Address Proof: Address Proof is required of all the members involved in the company.
- Company’s Address Proof: Company’s Address Proof is required that can confirm the actual location of the office. It can be any utility bill which should not be older than two months.
- DSC: Digital Signature Certificate of all the Designated Directors is required.
- PAN Card Details: Details of the PAN Card are required of all the directors, shareholders & members.
- Consent Letter: In case of any rented property, Land owner consent form is required, allowing companies to operate on their property.
- Other Documents: Documents such as copy of Company’s MoA (Memorandum of Association) & AoA (Article of Association) is required.
Public Limited Company Registration Procedure
To start a Public Limited Company either listed or unlisted procedure remains the same. Following are certain steps individual can follow to register their Public Limited Company:
- Step 01: Obtain DSC & DIN: To Start a Public Limited Company the first step is to obtain the Digital Signature Certificate for all the directors and subscribers of MoA & AoA. Next obtain the Director Identification Number for each proposed director.
- Step 02: Reserve Company’s Name: Once you obtain the DSC & DIN, next you have to reserve the company’s name. You can check the name availability on the MCA Portal. Make sure the name should be unique and easy to recognize.
- Step 03: File SPICe+ Form: Once your company’s name is approved, file the Incorporation form which is SPICe+ Form. This form includes each legal formalities and you just need to attach the MoA & AoA along with this form.
- Step 04: Incorporation Certificate: Once you fill the form, your application will be reviewed by the ROC (Registrar of Companies). On the approval of the application, ROC will issue the Incorporation Certificate for your Public Limited Company.
- Step 05: Open Company’s Bank Account: Now Open a bank account on Company’s Name through which you can handle all the financial transactions on company’s behalf.
- Step 06: Other Required Compliances: Once you open a bank account, certain registrations are required depending on your company’s industry. These Registration include GST, Import/Export License & Other Industry-specific License are required.
Benefits of Public Limited Company
Registering a Public Limited Company offers certain benefits and they are as follow:
1. Limited Liability: Public Limited Company offers limited liability to its shareholders which means they are protected from the company’s debt or unexpected liability.
2. Share Trading: In Public Limited Company, shares can be transferred among individuals by buying or selling options which can attract more investors in the company.
3. Flexibility: Public Limited Companies require a minimum of 7 members while there is no upper limit of shareholders which makes it easy to add unlimited shareholders in the company.
4. External Fund Raising: Public Limited Companies allows fund raising by selling shares to the public and using a variety of financial options.
Key Consideration for Public Limited Company
Before applying for a Public Limited Company Registration there are certain points that should be kept in mind. These key consideration are as follow:
- To start a Public Limited Company there must be at least three directors required and there is no upper limit on the number.
- Any Public Company either Listed or Unlisted must add a word ‘Limited’ or ‘Ltd’ at the end of its name as it helps in indicating that the company is legally a public entity.
- A Public Limited Company must prepare a prospectus. It is a document that includes the company’s operational activities and financial health. This document helps investors to get attracted and invest in your company.
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Conclusion
Public Limited Company is one another business structure which is owned on the basis shares. As the name suggests, company’s shares are distributed among the general public. To start a Public Limited Company an individual needs to gather all the required documents such as MoA, AoA, DSC, DIN, etc, and follow certain steps to get their company registered. There are multiple benefits a company can get after being incorporated as a public limited company. It is advised to list their company on the stock exchange to get speedy transfer of shares among the general public