According to the Companies Act 2013, a Public Limited Company is a separate legal entity. Further, the members of such a company have limited liability. Also, a public company offers shares to the general public. The shares of such a company are available via an initial public offer (IPO) or in the secondary market. There are several regulations governing the functioning of a public company. In this article, we will look at the features of a public limited company along with some basic requirements for registering a public limited company registration explained by Edge Legal.
Advantages Of Public Limited Company Registration:
Minimum Seven People: Minimum of seven people are required to start a public limited company in India. These companies shall have a minimum of three directors. The same seven people can become shareholders and directors of the company. However, maximum any number of people can become shareholders in a public limited company.
No Minimum Capital: The capital of the business is depending on the need of the business and statutory minimum capital is required to start the public limited company. However, the minimum authorized and subscribed share capital required for a public company is Rupees five lakh.
One Resident Director: Among director, one person must be a resident Indian.
Unique Name: The name of the public limited company should be unique and should not be similar to any existing company name or trademark.
Documents Required for Public Limited Company Registration:
Identity proof of Directors and Shareholders
- PAN Card for Indian Nationals (Mandatory)
- Passport for Foreign Nationals (Mandatory)
- Proof of nationality for Foreign Nationals
- Proof of Identity (Voter ID/Passport/Driving License) (anyone)
- Resolution of the board of company / LLP for authorization of director/partner
- 2 Passport size photos.
Address proof of Directors and Shareholders
- Bank statement/Electricity/Telephone/Mobile bill) (not older than two months) (any one)
Proof of Registered office
- Conveyance/ Lease deed/Rent Agreement etc. along with rent receipts (anyone)
- Copy of the utility bills (Telephone/Gas/Electricity bill) (not older than two months) (anyone)
- NOC from Landlord
- DSC form (physically signed)
Note: All the Documents in the case of the Foreign Director should additionally comply as follows:
- Notarized (if residing in commonwealth countries)
- Notarized & Apostiled (if residing in a country which is a signatory to Hague convention)
- Notarized & Consularised (If not covered in above categories)
Procedure For Registration of Public Limited Company:
Name reservation: The first step in incorporation is to reserve/approve the name of the company. The proposed name selected should do not contain any word which is prohibited under the Companies Act, 2013. An approved name is valid for a period of 20 days from the date of approval, for a new company. It is permitted to apply for two proposed names and one Resubmission (RSUB) while Reserving Unique Names for companies through the RUN web service.
Digital Signature Certificate (DSC) of Director: The application for a public limited company is filed online and it is mandatorily required to be signed by the director and shareholder of the company. So DSC is required to be taken for the directors and shareholder of the company, who is required to sign the e-form for registration before filing incorporation application for the company. Photo, ID, and Address proof is required along with the DSC application form for issuance of DSC.
Obtain Director Identification Number (DIN): DIN is a unique identification number to the directions issued by the Registrar of the Companies (ROC) for becoming a director in India. An application is filed along with ID and address proof duly attested by CS.
Approval of other authorities: The Registrar of Companies may require the applicant to furnish the approval or concurrence of any department, regulatory body, appropriate authority, or Ministry of the Central or State Government(s) in relation to the work to be done.
Document submission: Application for registration/incorporation of a public limited company is made to Registrar of Companies (ROC) along with Memorandum and Article of Associations, declaration, affidavits, etc. Minimum Seven persons are required for incorporation of a public limited company.
Certificate of Incorporation: ROC then scrutinizes the incorporation form and documents, if ROC finds the documents are in order, issues Certificate of Incorporation which is the Registration certificate of a public limited company. After receiving the certificate of Incorporation the public limited company is set to start its function.
PAN & TAN of the company: PAN and TAN are simultaneously applied along with company registration forms and are issued along with Certificate of Incorporation and also mentions in Certificate of Incorporation.
Opening of Bank Account: On submission of Certificate of Incorporation & other essential documents, the bank opens a current account in name of the company, required for the smooth running of the company.
Advantages Of Public Limited Company Registration:
A larger amount of capital: Public limited companies can bring more capital as compared to other forms of organization. There can be an unlimited number of shareholders, who can contribute to the capital of the public limited company.
Efficient management: Public limited company is a more efficiently managed entity as compared to another form of organization. These have a larger pool of talented people, who contribute to inefficient management of public limited companies.
Free transfer of shares: The shares of a public limited company are freely transferable and that too without the prior consent of other shareholders, as compared to private limited companies.
Larger Borrowing Power: Public companies are most recognized in terms of financial assistance/borrowing from banks and financial institutions and also there are several financial instruments available to public limited companies, which are not available to another form of business organization.
Limited Liability of shareholder: Liability of shareholders of the public limited company is limited only up to the shares subscribed by them and should not be personally liable for the debts of the company in case the company is unable to pay its liabilities.
Separate Legal Entity: Public limited company legal entities are separate from their shareholders/promoters.
Perpetual Existence: Public limited company’s existence will go forever and its existence will not be affected by the death of shareholders, directors, or the transfer of shares to others.
Capacity to Sue and to be Sued: Public limited company can take legal action against another and also another person can take legal action against the company separate from directors, shareholders & promoters.
Ownership of property: Public limited company can sell, purchase, and own the property like an individual.
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