Public limited company registration

About Public Limited

According to the Company Act of 2013, a Public Limited Company is a carefully regulated business with limited liability that offers shares to the general public. Anyone can purchase its stock via trades on the stock market or privately through (IPO) initial public offering. It is also advisable for a public company to be financially transparent to the shareholders. Examples of public limited companies include BHEL, Barclays, etc.

This type of business structure is suitable for large-scale business operations. A minimum of seven members are required to start a public company while there is no maximum limit whatsoever. Similarly, a minimum of 3 directors is required. A public limited company must have a minimum paid-up capital of Rs 5 lakh or such a higher amount as prescribed under the act.

Benefits

Limited Liability
A public company enjoys the features of limited liability i.e., a shareholder of the company has limited liability. They are not responsible for the company’s debts or liabilities for any amount more significant than what’s contributed by them.
Easy availability of Capital
A large amount of capital can be generated by offering shares to the general public at large. The funds may be also raised in equity shareholding, preference shareholding, or debentures.
Exponential growth
The company’s risks are often in sync with the market and can be spread out on the whole. Thus, fewer risks and a vast capital base favor expansion and growth of the business bringing in more business opportunities.
Transferability of shares
In a Public Limited Company, a shareholder can easily transfer the shares to other legal entities- be it an individual or an organization in India or abroad.

Limitations

Stringent regulations
To safeguard shareholders from potential PLC-based repercussions and to give transparency to shareholders, it is crucial to establish more stringent legal procedures. This entails an emphasis on observing numerous laws and greater administrative responsibilities.
Market Vulnerability
Share or Stock values are unreliable and can plummet down due to many external features. This results in a loss on the company's behalf and can increase the company's vulnerability to the Market.
High cost for formation and Management
There is a requirement of high paid-up capital of Rs. 5 lakh for the formation of a Public company. Also, a lot of capital and resources is required to manage the company.
Ownership and Control Issues
The public company grants shares to the general public, giving them access to the company's ownership as well. In PLCs, shares count as votes. Thus selling more than 50% of your firm puts you at risk of losing ownership if shareholders decide to seize control or even vote you out.

Documents Required Public Limited Company

The list of documents for incorporation is quite similar to Private Limited. With the SPICe+ form, one can successfully apply for company incorporation along with requisite documents and prescribed fees.

Documents from Directors like PAN Card, Identity proofs, Address proofs, photographs, etc.
Memorandum of Association (MOA)
Articles of Association
Proof of the Registered office of the proposed Company, proof of ownership, and a NOC from the owner.
Declaration and Consent of the proposed Director
Copy of utility bills

Registration/ Incorporation Process

Obtain DSC (Digital Signature) through Government certifying agencies to file the forms for company formation.
As a Director of the company, it is essential to get registered on the MCA portal.
Apply for DIN (Director Identification Number), which is an identification number for a director through SPICe+. Under this filing process, a maximum of three directors can apply for DIN.
The name can be approved in the Form SPICe+ 32 application. Only one preferred name, along with the significance of keeping that name, can be given in the Form SPICe+ 32 application.
Once the name is approved, the SPICe form is submitted in the MCA portal along with DSC, SPICe -MoA, SPICe-AoA, and Form DIR-2 ( Consent of the Proposed Director).
Following the verification of applications and documents by the authorities, the company would then receive its Certificate of Incorporation(COI), which will include its CIN (Corporate Identification Number) and the Date of Incorporation. Also, you will receive PAN and TAN simultaneously.
Apply for opening the company’s Bank account through the AGILE-PRO-S linked web form.
After acquiring the COI, the company cannot immediately begin operations. Within 180 days following the COI, the company must submit an application for a certificate of commencement confirming that all subscribers have paid their subscription fees.

Post-Incorporation Compliances

A company incorporated as a Public Company Limited can be listed or unlisted. Listed companies are companies that have some of their securities listed on a recognised stock exchange. In contrast, Unlisted companies have no securities listed on any stock exchanges. The incorporation process is the same irrespective of whether they are listed. However, the post-incorporation compliances can differ in each case.

Listed Companies

It is mandatory to hold an Annual General Meeting and Form MGT-15 must be filed once AGM is over.
The Financial statement consists of the balance sheets, cash flows statements, Director's statement, Director's report, Auditor's report, and the combined financial state is to be filed via form AOC 4.
Filing of Annual Returns through MGT7 with relevant ROC.
Income Tax Returns to be filed with the Tax department in form ITR 6 on or before September 30th of the financial year.
Submission of the Secretarial report is a requirement if the total paid-up capital or annual turnover exceeds Rs. 50 Crores.

Unlisted Companies

At least four board meetings are to be held every year.
Annual General Meeting to be held, and within 30 days of AGM, the appointment of CFO or CEO or CS should take place. Appointment of Auditor to be completed within 30 days of the board meeting. Each provision must be filed through form MGT 14(DIR 12) for the former and CRA 2 for the latter.
Returns of deposits have to be filed with the ROC under whose jurisdiction the company falls via Form DPT 3.
Establishment of a Corporate Social Responsibility (CSR) committee and their meetings.
Directors are required to disclose any financial interest in the Company via Form MBP 1.

Closure of Public Limited Company

For striking off the name of the company, a company should not have any assets or liabilities except for the Capital on the Liability side and losses on the Asset side.
The company shall hold a meeting of the board and pass a resolution for striking off the name of the company and shall call for the meeting of shareholders to get their approval via Special Resolution to strike off the name of the company.
If the company is not holding an Extra-Ordinary Meeting, the directors must obtain seventy-five (75%) percent consent of members in terms of paid-up share capital.
File the e-form STK-2 along with the prescribed fee for removing the name of the company from the Registrar of Companies.
On receipt of such an application, the Registrar shall issue a public notice in the manner provided.

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