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A Public Limited Company is a limited liability company in which shares are freely transferable between shareholders. It can take debt funds, deposits and investment in the form of shares from the general public. Public Limited Company can be listed on a stock exchange and can have any number of shareholders. The shareholders are not liable for business losses in excess of the amount they paid for the shares. When compared to Private Limited Companies, LLPs and OPCs, Public Limited Companies have profuse options to raise funds through Angel Investors and Venture Capitalists.
Advantages & Restrictions
There are many advantages inherent of a Public Limited Company. Issuing public shares help raise huge capitals. Public Limited Companies have greater borrowing power. Hedge funds, mutual funds, professional traders and individual investors are always keen on listings on a public stock exchange. Prospect of substantial capital amassment is the main perk. Growth and expansion capacity are greater for a Public Limited Company. But there’s equal share of strict regulations as well, pertaining to the functioning of a Public Limited Company. Shareholders as well as the public, who could be prospect shareholders, need to be appraised of the financial disposition of a Private Limited Company through regular reports. An exhaustive statement of the undertakings of the company, the Prospectus, too requires to be issued to the public. Transparency in accounting is a prerequisite. Pressure from shareholders and takeover bids from rivals too need to be dealt with. In market, Public Limited Companies are mostly preferred to deal with, rather than proprietorship or normal partnership firms. Only Public limited companies are eligible to get their share listed on the stock exchanges in India. Public Limited Companies are mostly preferred in government contracts as well. Every unlisted public company must keep their shares in dematerialised form.
Directors & Shareholders
A Public Limited Company is required to have a minimum of 3 directors, of which at least one is a resident Indian. No restrictions as for the maximum limit. The minimum number of shareholders needed to form a Public Limited Company is 7. Unlike Private Limited Companies, there is no such requirement of capital of Rs. 5,00,000/- for public Limited Company as it is omitted.
Private Limited Company, One Person Company and Limited Liability Partnerships can be converted into Public Limited Company.
Income of Public Limited Companies having turnover upto Rs. 400 Crores are taxable at 25% plus 4% Health and Education Cess as per section 115BA. There is a surcharge of 7% if the company’s income is above Rs.1 crore and but does not exceed 10 crores. If the income exceeds 10 crores, then the surcharge will be 12%.
Applying for the company name is the initial step to registration of a PLC. The name should be unique; it should not be a name already taken by other registered companies. Names that are prohibited under the ‘Emblems and Names Act, 1950’ cannot be proposed. The proposed name shall end with the term ‘Limited’. Company name can be reserved either via RUN (Reserve Unique Name) or via SPICe (Simplified Proforma for Incorporating Company Electronically).
All subscribers and directors are required to obtain digital signature certificate to authenticate the documents that are being filed.
Along with MoA, AoA, declaration and affidavits, application for registration/incorporation of the Public Limited Company is submitted to the ROC.
After due scrutiny of the documents submitted, ROC will issue the Certificate of Incorporation which essentially declares the Registration of the proposed Public Limited Company.
For Directors/Shareholders:
(For Resident and non-resident Indians and Foreign nationals who are holder of PAN)
(Any one)
(Not older than Two months)
For Company in Registration:
A Utility Bill (Telephone bill, Electricity bill or Gas bill not older than two months) in owner’s name.
Following are the procedures to be performed post incorporation
A Public Limited Company (PLC) is a business establishment that offers its shares to the public. Anyone can acquire the stock of a PLC.
A Public Limited Company should have a minimum of 3 directors, of which at least one should be an Indian citizen. There is no limitation as to the maximum number of directors
The Companies Act requires a minimum of 7 shareholders to form a Public Limited Company. There is no upper limit to the maximum number of shareholders.
Yes, a Public Limited Company can be converted into Private Limited Company, Limited Liability Company, One Person Company, Partnership or Proprietorship.
Rs. 5 lakhs is the minim paid-up capital for a Public Limited Company.
Yes, a Public Limited Company’s existence will not be affected by the death of the directors or its shareholders. A Public Limited Company continues to exist even in the event of the company going bankrupt/ insolvent
No, a Public Limited Company need not be listed always.
No, Public Limited company must keep its shares in dematerialised form.
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