About Public Limited Company Registration in India
A public limited company is a type of business entity where ownership is divided into shares that are publicly traded on a stock exchange. This means that members of the public can buy and sell shares in the company, making it easier for the company to raise capital from a large number of investors. Public limited companies are often larger and more complex than private limited companies and are subject to stricter regulatory requirements.
Eligibility of Public Limited Company
To establish a public limited company, there are several eligibility criteria to meet:
1. Minimum number of members: A public limited company must have a minimum of seven shareholders to commence operations.
2. Directors: The company must have a minimum of three directors to manage its affairs, with at least one director being an Indian resident.
3. Capital: There is no specific minimum capital requirement for a public limited company. However, the company must issue a prospectus or statement in lieu of a prospectus before collecting funds from the public.
4. Compliance: The company must adhere to regulatory requirements set forth by the Companies Act, including filing annual returns, conducting statutory audits, and holding annual general meetings.
Meeting these eligibility criteria ensures that the public limited company operates in compliance with legal and regulatory standards.
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Key Features & Benefits
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Enhanced Business Trustworthiness
Details concerning the company, including its name, date of incorporation, registered office address, and status, are accessible through a publicly searchable database such as the MCA. This accessibility heightens trust and confidence among customers, vendors, and investors, bolstering the company’s credibility.
Distinct Corporate Identity
A public limited company boasts an autonomous legal identity apart from its shareholders. Upon incorporation, it receives a distinctive registration number, similar to that of a limited liability partnership. This registration number remains constant throughout the company’s lifespan, regardless of any name alterations.
Shareholders’ Liability Limitation
In a public limited company, shareholders benefit from limited liability. This means that shareholders are only liable for losses or debts incurred by the company up to the amount of their investment. Unlike partnerships and sole proprietorships, where owners bear joint and several liability for business debts, shareholders in a public limited company are protected from personal liability beyond their invested capital.
Foreign Direct Investment Opportunities
In a public limited company, Foreign Direct Investment (FDI) up to 100% is permitted under the automatic route. This enables foreign entities or individuals to invest in the company without requiring prior approval, thereby offering significant opportunities for global expansion and investment.
Simplified Exit Strategies
In a public limited company, shareholders enjoy simplified exit strategies. Individuals or entities have the freedom to transfer or sell their shares, either partially or entirely, without encountering any restrictions. This flexibility facilitates seamless exits for shareholders, allowing them to realize the rewards of their efforts with ease.
Diverse Funding Sources
Public limited companies possess the capacity to attract funding from various sources, including angel investors, private equity firms, and other entities. This is achieved through the issuance of shares, transfer of shares/debentures, or other means. Such flexibility enables public limited companies to access a wide range of funding options, fostering rapid growth and expansion.
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Process of Public Limited Company Registration
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01
Verifying Proposed Name Availability
When checking the availability of a proposed name for a public limited company, it’s crucial to avoid similarities with existing company names or trademarks. While the Companies Act 2013 offers some flexibility in naming, specific rules and restrictions must be observed. Additionally, the name of the public company should end with the word ‘Limited’. It’s recommended to submit two preferred names in sequential order, and company name rules and guidelines will be applied during the application process.
02
Acquiring Digital Signature Certificates (DSC)
In the registration process of a public limited company, all documents are electronically submitted via the MCA Portal. The incorporation forms necessitate certification by the directors and shareholders using digital signature certificates. Each director and shareholder must possess a digital signature certificate to validate the authenticity of the filed documents.
03
Execution of Company Registration Documents
Following the verification of the company name availability, the promoters of the public limited company must proceed with the execution of the company incorporation documents. This includes the memorandum of association (e-MOA) and articles of association (e-AOA), which must be executed in the prescribed format. Additionally, documents such as consent to act as director, affidavits and declarations, and KYC of promoters are required. Furthermore, a utility bill not older than two months for the registered office address must be submitted as well.
04
Submission of Company Incorporation E-Forms
To successfully complete the incorporation process of a public limited company, it is imperative to submit the necessary e-forms via the MCA website for approval. This digital submission facilitates efficient processing and ensures compliance with regulatory requirements.
05
Issuance of Certificate of Incorporation
Upon approval of the submitted forms, the Ministry of Corporate Affairs will generate the certificate of incorporation for the public limited company. This official document serves as confirmation of the company’s legal establishment and signifies the successful completion of the incorporation process.
Documents Required For Private Limited Registration
Common mistake! entrepreneur pays less attention to company compliances.
Two name of company ( proposed )
Main object details
Capital details ( authorized and paid up)
The copy of pan card
Self –attested copy of identity proof (voter card, passport, driving license)
Self-attested copy of address proof (bank statement, mobile bill, telephone bill, electricity bill not older than 2 months)
Photograph of all subscribers and directors
Email & mobile number
Digital signature
Utility bill for registered office address of the company, such as electricity bill/property tax bill/ telephone bill/mobile bill/gas bill etc.
For rented property ( rent agreement )
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FAQ's
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What is Incorporation Timeline for Public Limited Company?
Typically, the registration of a public limited company takes approximately 8-10 working days. However, due to the involvement of legal procedures and government approvals, it’s impractical to commit to a fixed timeframe. Startups are advised to plan ahead of their business announcement date to accommodate any potential delays in the incorporation process.
What is the minimum requirement for establishing a public company?
The primary requirement for setting up a public company is to have a minimum of seven shareholders and three directors. Additionally, the directors themselves can also be shareholders in the company.
Was there previously a minimum requirement for paid-up share capital for incorporation?
Previously, there used to be a minimum requirement for paid-up share capital. However, currently, there is no such limit, and any amount of paid-up capital can be utilized for the incorporation of a company.
Is it possible to transfer equity shares to individuals outside the company?
Yes, after the allotment of shares, they can be transferred to outsiders. Even a portion of the holding can be transferred to a transferee, provided that the SH-4 transfer deed is executed to formalize the transfer process.
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