A Guide to Start a Public Limited Company
What is a public limited company?
A public limited company (PLC) is a business entity that trades its securities in the stock market or offers its shares to the public. It raises a good amount of funds through public issue shares. A public limited company is easy to incorporate and this is the key reason behind its huge popularity in India. A PLC can be formed with a minimum 3 directors and 7 shareholders along with a registered office.
Key Characteristics of a Public Limited Company
Some of the major characteristics are mentioned below:
A separate Legal Entity
A PLC is a legal entity that has a separate identity from its members and shareholders.
Paid Up Capital
To start a public limited company's operations, the minimum paid up capital required company is Rs.500000. This is the latest amendment as per the Company Act 2013.
Board of Directors
For public limited companies, the number of directors can be minimum 3 and maximum can be as many. They must possess the director identification number or DIN KYC that is issued by the ministry of corporate affairs (MCA).
Remember, it is very easy to purchase shares in the public limited company and thus it is as easy to exit the company.
The Minimum subscriber to the memorandum of association (MoA) of a public company has to be 7 and are members of the company.
Advantages of Public Limited Company
Some of the advantages that a Public Limited Company avails through registration are listed below:
Raising Funds through Public Issue Shares
In the case of the public limited company registration, the proposed business legal entity can raise funds through the public.
The public limited company publishes it's statutory details and reports to maintain transparency due to public investment. They also publish reports to provide accurate information of its current financial position.
Shares of a PLC are bought and sold in the stock exchange market of India. They are transferable between its members and people who are trading in the stock exchange.
Going public will boost the options for founders of the PLC to exist in the business at some point in the future if they want to. Both higher transferability of shares and the increased visibility of the company and its performance can boost the chances of bid interest from potential suitors.
Private Limited Company is not affected by the death of one of its shareholders but her or his shares are transferable to the next of kin and the business entity continues to run its operations as usual. An election is held to replace the deceased director in the case of the director's death.
Disadvantages of Public Limited Company
Some of possible challenges that members of a Public Limited Company may face:
A PLC is a complex thing to start. The firm banker then provides the initial shares to the public and charges a big amount of money as commission. The costs of setting up a public limited company and initial public offering (IPO) can run into hundreds of thousands to dollars.
To maintain transparency as well as trust of the shareholders, a public limited Company provides full disclosure to the public because of which secrecy can't be maintained. Also, the public is involved in the decision making, the Business entity can't maintain the secrecy.
A PLC Company is only favorable to large scale business that is a disadvantage to small scale business enterprises.
More Vulnerable to Takeovers
A business entity can become vulnerable to a hostile takeover if most of the shareholders agree to a bid. A potential bidder can build up a shareholding in advance of launching a bid attempt with shares being freely transferable.
What Documents are Required?
Documents required can be divided into two parts. 1) In respect of directors and 2) In respect of registered office.
- PAN Card: (Self-attested by the directors)
- Scanned copy of Latest Bank Statement
- Phone Bill or Electricity or Gas Bill(Self-attested by the director)
- Voter's ID/ Passport/ Driver's License: (Self-attested by the directors)
- Scanned copy of passport-sized photograph
Documents required for the foreign nationals:
- Address Proof: The director can attach any of the documents as an address proof such as Driving License, Residence Card, Bank Statement and Government issued form of Identity containing Address
In respect of Registered Office Address:
The registered office address proof as mentioned below must be submitted along with the form filed for Certificate of Incorporation in the name of the public limited company:
- The document states the full address of the company, where the company will be registered, such as the Electricity Bill, Property Tax Bill, Phone Bill etc.
- If it is a rented property, then NOC (No Objection Certificate) is required along with the valid Rent Agreement by the owners of the Property.
How to Register a Public Limited Company?
Want to register your company as a public limited company? Remember, registering your company as a public limited company is difficult because the procedure is complicated and involves many complications. But, don't worry, ExpertBells can help you in every step of the public limited company registration in India. Rather than reading through the entire registration process, you can avail their expert service.
You have to follow the simple steps given below for public ltd company registration India:
Step 1: Obtain Digital Signature Certificate (DSC). Digital signatures are required to file the forms for company formation. Also, the registration process is completely online and the forms require a digital signature.
Step 2: Obtain DIN. DIN is an identification number for a director and has to be obtained by anyone who wants to be a director in a company.
Step 3: Name Availability
Step 4: Form INC-32
Step 5: e-MOA and e-AOA (e-MoA refers to an electronic Memorandum of Association while eAoA is electronic Articles of Association. These forms have been introduced to make company registration in India easier.
Step 6: PAN and TAN Application.
For legal assistance in the procedure of Public Limited Company Registration in India consult ExpertBells.