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Public Limited Company

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Public Limited Company

What is Public Limited Company?

As per the Companies Act,2013, Public company means a company which

(a) is not a private company;

(b) has a minimum paid-up share capital may be prescribed

Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles.

In general parlance, A Public Limited Company is a company that has limited liability and offers shares to the general public. It’s stock can be acquired by anyone, either privately through (IPO) initial public offering or via trades on the stock market.

Features

Directors – For Public Limited Company Registration, the company must have minimum 3 directors, 7 Shareholders and A company can appoint maximum 15 fifteen directors. A company may appoint more than fifteen directors after passing a special resolution in general meeting and approval of Central Government is not required.

Minimum/Maximum Members – Minimum number of shareholders is 7 and there is no limit on maximum number of shareholders unlike Private Limited Company which has an upper limit of 200.

Paid Up Capital – It needs minimum Paid up Capital of Rs.5 lakh or such higher amount as may be required in the act.

Separate Legal Identity – A company has its own identity which doesn’t affects by the death, insolvency or bankruptcy of its shareholders or directors.

Limited Liability – A shareholder of a public limited company isn’t personally responsible. The liabilities of the shareholders are limited. It means limited roughly to the face value of the shares they own contrary to partnerships and sole proprietorships, where the partners and business owners are jointly and severally liable for the debts of the business. Moreover, shareholders do not have to take part in the day-to-day management of the business of the company.

Prospectus – For a layman, it’s like an invitation card to the public for subscribing the shares of the company. There is a requirement under the Act for public limited companies to issue a prospectus. It is a formal document that is required by and filed with the Securities and Exchange Commission (SEC).It is filed for offerings of stocks, bonds, and mutual funds. The document can help investors make more informed investment decisions because it contains a host of relevant information about the investment security.

Name – It is a compulsory requirement under the Companies Act, 2013 for all the public companies to add the word ‘limited’ after their name.

More Transparent – Limited companies, whether public or private, have more of their details in the public domain, available via Companies House, than other business types. The fuller form of accounts means a public limited company has to disclose more detailed data about the business and its performance, information which is then available to anyone who wishes to access it.

Why Public Limited?

Huge Capital – The Public limited company has the feature of huge magnitude of capital than that of the Private limited company.

No Limit on Shareholders – There can be any no. of shareholders in a public limited hence enabling huge investment through public.

Risk Dilution – Offering shares to the public gives the opportunity to spread the risk of company ownership among a large number of shareholders.

Transferability of Shares – Shareholders are entitled to transfer their shares freely without needing the consent of someone.

Finance Opportunities – A public limited company is always in a better position when looking at other potential sources of finance. Being listed on a stock exchange can helps to improve a company’s creditworthiness thus increasing the willingness of Banks and other financial institutions to provide more finances. A company can also negotiate better for favorable interest rates and repayment terms on loans.

Growth Opportunities – By having more finance, more readily available and on better terms than a private company, the public limited company can be in an advantaged position to: Pursue new projects, new products or new markets, can make capital expenditure to support and enhance the business and can grow substantially.

Documents Required

  • Copy of PAN Card of directors
  • Passport size photograph of directors
  • Copy of Aadhaar Card/ Voter identity card
  • Copy of Rent agreement (If rented property)
  • Electricity/ Water bill (Business Place)
  • Copy of Property papers (If owned property)
  • Landlord NOC
  • Director Identification Number (DIN) of all the directors
  • Digital Signature Certificate (DSC) of the directors
  • Memorandum of Association (MOA)
  • Articles of association (AOA)

Still have any confusion or doubt related to Public Company Registration? Feel free to contact us. We offer services of Companies, LLPs, Partnership, HUF registration and many other services. Give us a chance to serve you. 

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