How to Start a Public Limited Company in India

Table of Contents

• What is a Public Limited Company?
• Characteristics of a Public Limited Company
• Benefits of a Public Limited Company
• Requirements for Setting Up a Public Limited Company
• Step-by-Step Procedure for Registration
• Documents Required for Registration
• Certificate of Incorporation
• Certificate of Commencement of Business
• Compliance Requirements for a Public Limited Company
• Conclusion

Starting a public limited company (PLC) offers significant advantages like raising capital publicly, enhanced credibility and no restrictions on share transfers. However, setting up a PLC involves adherence to various legal formalities under the Companies Act, 2013. This comprehensive guide from filingwala.com takes you through the entire process of forming a public limited company in India.

If you don’t know who is filingwala.com, it is a leading service provider of Startup’s Company Registration. May that be a Public limited Company , Private Limited, One Person, Section-8 or Limited Liability Partnership registration work.

What is a Public Limited Company?

Public limited companies (PLCs) are companies that offer shares to the general public through an initial public offering (IPO) or via stock exchange listing. Shareholders of PLCs have limited liability, meaning that they are only liable for the value of the shares they own. PLCs must have at least seven members and three directors.

The law requires companies to add the term “Limited” to their name and issue a prospectus when offering shares to the public. Public limited companies (PLCs) are subject to strict regulation and must make extensive disclosures about their operations and financial position.

Characteristics of a Public Limited Company

These key characteristics define a public limited company in India:

Minimum Number of Members and Directors

To start a public limited company in India, you need a minimum of 7 members and 3 directors. There is no upper limit on the maximum number of members.

‘Limited’ Suffix

The company name must end with the word ‘Limited’ or ‘Ltd’. This is a mandatory requirement for all public limited companies.

Issuance of Prospectus

A prospectus is like an offer document that provides details about the company’s operations, financials, management etc. A public limited company has to issue a prospectus to the public before allotting shares. You can ask an expert on filingwala.com to know more about this.

No Restriction on Share Transfers

Public limited companies allow eligible members to freely transfer shares in accordance with the procedures set forth in the Articles of Association.

Separate Legal Entity

A public limited company has an identity distinct from its members. Members have limited liability upto the value of shares purchased.

Listed Entity

Public limited companies list their shares on stock exchanges once they meet the listing requirements, allowing retail investors to freely buy and sell them.

Benefits of a Public Limited Company

Here are some major advantages of a public limited company:

Access to Capital

Public limited companies can raise vast amounts of capital by issuing shares to the public, with no limit on the number of shareholders, allowing them to continuously raise capital.

Liquidity

Publicly listed companies allow investors to easily buy and sell shares on stock exchanges, providing them with liquidity options.

Credibility

A public limited structure enhances credibility due to compliance requirements and accountability through financial disclosures.

Professional Management

PLCs attract top professional talent for management roles. The board structure facilitates professional decision-making.

Growth Potential

The ability to raise large capital from the market enables greater potential for business growth and expansion.

Limited Liability

Public limited companies shield members from losing more than the value of their shares, protecting their personal assets.

Requirements for Setting Up a Public Limited Company

If you want to set up a public limited company in India, the key requirements are:

• Minimum 7 Members: You need at least 7 members to start a public limited company. There is no upper limit.
• Minimum 3 Directors: The board requires a minimum of three directors.
• Minimum Authorized Capital: The minimum authorized share capital should be Rs. 5 lakhs.
• Mandatory ‘Limited’ Suffix: The name must end with ‘Limited’ or ‘Ltd’.
• Issue Prospectus: Before allotting any shares to the general public, you must issue a prospectus.
• Listing Requirements: You must eventually list the shares on a stock exchange.

Meeting these conditions is mandatory. Non-compliance can attract penalties. For more thorough information on this you can visit filingwala.com.

Step-by-Step Procedure for Registration Public Limited Company

Follow these steps for smooth incorporation of your PLC:

Step 1) Obtain Digital Signature Certificate (DSC)

As the registration process is fully online, you need a digital signature certificate (DSC). All proposed directors and shareholders must procure DSC.

Step 2) Get Director Identification Number (DIN)

Before applying for company registration, the directors must obtain a Director Identification Number (DIN). This is a unique identification number that must be quoted in all documents.

Step 3) Select a Unique Company Name for Public Limited Company

You have to choose a suitable name for your company and ensure it is not already registered. The name must end with ‘Limited’ or ‘Ltd’.

Step 4) Prepare Incorporation Documents

The main documents required are:

• Memorandum of Association (MoA)
• Articles of Association (AoA)
• Declaration by Professionals
• Affidavit and Consent from Directors
• Proof of Registered Office address

Step 5) Fill SPICe+ eForm

1. “You should consolidate all information and documents into the SPICe+ eForm on the MCA portal.”
2. “Carefully fill in all details and attach scans of documents.”

Step 6) Pay Registration Fee

Pay the prescribed registration fee depending on authorized capital through online modes. Fees start from Rs. 5,000 onwards.

Step 7) Obtain Certificate of Incorporation

On approval, the Registrar of Companies (RoC) issues a Certificate of Incorporation. This certifies that your public limited company is now formally registered and you can commence operations.

Documents Required for Registration of Public Limited Company

Here are the key documents required for PLC registration:

• Identity Proof: PAN card and Aadhaar card of all directors and shareholders.
• Address Proof: Voter ID, passport, electricity bill etc.
• Registered Office Proof: NOC from landlord and documents like electricity bill.
• DIN: Director Identification Number of all directors.
• DSC: Digital Signature Certificate of a director.
• MoA and AoA: Drafting as per statutory format and stamping required.
• Declaration by Professionals: CA, CS, CWA certification for compliance.
• Consent Letters: From directors, shareholders, auditors, managers etc.
• Memorandum and Articles of Association (MOA/AOA): Contains company rules.

Having all documents ready as per specified formats avoids delays.

Certificate of Incorporation for Public Limited Company

After successfully registering your company, you will receive a Certificate of Incorporation (COI). This certificate is proof that your company is now formally incorporated as per Companies Act, 2013.

The COI is issued by the Registrar of Companies (ROC). It mentions your company’s Corporate Identity Number (CIN), authorized share capital, number of members etc.

You can download the COI from the MCA portal once issued by RoC. The COI enables you to legally start operations and enter into contracts. But you still need one more certificate before commencing business which is explained next.

Certificate of Commencement of Business

Besides the Certificate of Incorporation, you also need a Certificate of Commencement of Business (COCB) to start actual operations.

To get COCB, you have to file an application along with these documents:

• Declaration of compliance – Affirming fulfillment of incorporation requirements
• Verification of registered office – Like electricity bill on company address
• List of directors – Containing consent to act as directors
• Proof of directors’ appointment – Through Form DIR-12
• Evidence of share capital deposit – Like bank account statement

After scrutinizing these documents and finding them satisfactory, the RoC issues the COCB. Now you can officially start the operations of your public limited company.

Compliance Requirements for a Public Limited Company

Once your company is registered and commences business, you have to ensure ongoing compliance with various requirements under the Companies Act 2013 such as:

• Annual Filing: Every year, file the Annual Return in Form MGT-7 with RoC.
• Financial Statements: Prepare annual accounts and get them audited. File with RoC.
• Board Meetings: Hold at least 4 meetings annually and file reports.
• AGM/EGM: Conduct an Annual General Meeting/Extraordinary General Meeting of shareholders.
• Event-Based Filings: Intimate RoC of changes in directors, members, registered office etc.
• Income Tax: File quarterly TDS returns, annual Income Tax returns etc.

Non-compliance can attract heavy penalties and other consequences. Hence, it is advisable to use professional help to meet all compliance requirements correctly and on time.

Some key penalties for non-compliance are:

• Delay in annual filing – Fine up to Rs. 1 lakh
• Missing board meetings – Fine up to Rs. 25,000 per director
• Not conducting AGM – Fine up to Rs. 5 lakhs
• False statements – Imprisonment up to 5 years

Therefore, it is crucial to take compliance very seriously right from the first year of operations to avoid facing regulatory actions

Conclusion

Setting up a PLC offers many benefits but requires adherence to the Companies Act and SEBI regulations. This comprehensive guide has explained the entire process of registering a public limited company in India including requirements, documents, fees and post-incorporation compliance.

To ensure a smooth process, be sure to adequately plan and prepare before starting the procedures and requirements for establishing a PLC. I highly recommend seeking professional assistance to avoid errors or non-compliance, which will save you time and effort.

Here are some key takeaways from this guide:

• Minimum 7 members and 3 directors needed
• Mandatory suffix ‘Limited’ in name
• Minimum authorized capital Rs. 5 lakhs
• Issue prospectus before allotting shares
• Obtain DIN, DSC, registered office proof
• Prepare MoA, AoA and other documents
• File SPICe+ form on MCA portal
• Obtain COI and COCB before operations
• Comply with annual filings, audits, board meetings etc.

We hope this detailed guide helps you successfully form your own public limited company in India. Do share your feedback on how we can improve it further.