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Introduction

A public limited company (PLC) is an important aspect of corporate structure and is primarily governed by the Indian Companies Act, 2013. Unlike a limited liability company, a PLC can attract investment from a wide range of investors, from individuals to institutional entities, thereby improving its capital base and market influence. A key feature of a PLC is its limited liability feature, which protects shareholders from personal liability beyond their investment in the company.

The establishment of the PLC requires many regulatory requirements and document processes that meet transparency and compliance with legal standards. The company is traded in public, giving investors liquidity and can get a lot of resources for business expanding. However, this disclosure also entails increased scrutiny and regulatory obligations, which are essential to maintain investor confidence and comply with market rules.

Registration and regulation of limited companies is primarily regulated by the Companies Act 2013. The Bill sets out the legal framework for the formation of a PLC, including requirements for shareholders and directors, capital rules and compliance obligations. The Bill ensures that PLCs operate transparently and meet their responsibilities to shareholders and regulators.

Documents Required for Public Limited Company Registration

• Proof of Identity: PAN cards, passports, and nationality proof.

• Proof of Address: Recent utility bills or bank statements (within 2 months).

• Registered Office Proof: Conveyance or rent agreement, utility bills, and No Objection Certificate (NOC).

• Director Identification Number (DIN): For all directors.

• Digital Signature Certificate (DSC): For all directors and shareholders.

• Memorandum and Articles of Association: Company’s objectives and regulations.

Overview about the Legal Service

The registration process for a Public Limited Company involves several steps to ensure compliance with the Companies Act, 2013. This includes obtaining necessary approvals, submitting documentation, and fulfilling legal requirements to secure incorporation. The process is designed to establish the company as a distinct legal entity, capable of issuing shares to the public and operating under regulatory oversight.

Types

Public Limited Companies can be categorised based on their listing status and capital structure:

1. Listed Public Limited Companies: These are companies whose shares are traded on recognized stock exchanges. They must comply with stringent disclosure and reporting requirements, including regular financial statements and adherence to corporate governance standards.
2. Unlisted Public Limited Companies: These companies are not listed on stock exchanges but can still issue shares to the public. They are subject to fewer regulatory requirements compared to listed companies but must still adhere to the Companies Act’s provisions.

Eligibility Criteria

To establish a Public Limited Company, the following criteria must be met:

1. Minimum Shareholders: At least 7 shareholders are required.
2. Minimum Directors: At least 3 directors are necessary.
3. Authorised Share Capital: There is no minimum capital requirement for a PLC; however, an authorised share capital of at least Rs. 1 lakh is generally needed.
4. Resident Director: At least one director must be a resident of India.
5. Unique Company Name: The proposed company name must be unique and not resemble any existing company or trademark.

Detailed Steps and Entire Process

1. Digital Signature Certificate (DSC): Obtain DSC for all directors and shareholders. This is necessary for signing and submitting the online registration forms.
2. Director Identification Number (DIN): Acquire DIN for each proposed director. This number is mandatory for all directors in Indian companies.
3. Name Reservation: Apply for name reservation through the MCA portal to ensure the proposed name is available and meets legal requirements.
4. Filing Forms: Complete and submit the SPICe+ form on the MCA portal, along with necessary documents like MOA, AOA, and proof of identity and address.
5. Document Submission: Submit the required documents, including affidavits and declarations, to the Registrar of Companies (ROC) for review.
6. Certificate of Incorporation: Upon successful verification of the application and documents, the ROC will issue a Certificate of Incorporation. Following this, the company must apply for a Certificate of Business Commencement.
7. PAN and TAN: Apply for PAN and TAN for the company. These are required for tax purposes and compliance.
8. Bank Account Opening: Open a current bank account in the company’s name after receiving the Certificate of Incorporation.

Advantages & Disadvantages

Comparison with Other Similar Services

Private Limited Company vs. Public Limited Company:

• Capital Raising: PLCs can raise capital through public offerings, while Private Limited Companies rely on private investors.
• Regulatory Compliance: PLCs face more stringent regulatory requirements compared to Private Limited Companies.
• Share Liquidity: Shares in PLCs are publicly traded, offering greater liquidity, whereas Private Limited Companies have restricted share transferability.

Post Registration Compliance

After registration, a Public Limited Company must comply with ongoing regulatory requirements:

1. Annual Reporting: File annual financial statements and annual returns with the ROC.
2. Board Meetings: Conduct regular board meetings and maintain accurate minutes.
3. Statutory Audits: Undergo annual statutory audits conducted by a qualified auditor.
4. Disclosure Obligations: Adhere to continuous disclosure requirements, including periodic financial reports and significant corporate actions.

Myths and Facts About Public Limited Company Registration in India

Myth 1: Public Limited Company Registration is Complicated and Time-Consuming

Fact: While the registration process involves detailed steps and compliance with regulatory requirements, the use of professional services like company secretaries and legal advisors can streamline the process and ensure timely completion.

Myth 2: You Need a Large Amount of Capital to Register a Public Limited Company

Fact: While public companies typically require substantial capital, the minimum paid-up capital requirements have been relaxed over time, making it more accessible for various businesses.

Myth 3: Public Limited Companies are Only for Large Corporations

Fact: While large corporations often opt for public company status, smaller companies with growth potential can also benefit from raising capital through public offerings.

Myth 4: Public Limited Companies Have No Privacy

Fact: Public companies must disclose financial and operational information, but they still have internal strategies and business practices that are not publicly disclosed.

Myth 5: Public Companies Must List on the Stock Exchange Immediately

Fact: Listing on a stock exchange is a common step but not mandatory for all public companies. Some may choose to stay unlisted while still maintaining public company status.

Myth 6: The Registration Process is the Same as for Private Companies

Fact: The registration process for a public company involves additional steps, such as obtaining approvals from regulatory bodies and complying with stricter disclosure and governance requirements.

Myth 7: Public Companies Have Less Control Over Their Business

Fact: While public companies have to adhere to regulations and shareholder interests, they maintain significant control over their business operations and strategic decisions.

Myth 8: Public Companies Are Only Beneficial for Raising Capital

Fact: Beyond capital, public company status can enhance a company’s visibility, credibility, and market reach, providing various strategic advantages.

Myth 9: All Public Companies Are Automatically Profitable

Fact: Being a public company does not guarantee profitability. Companies must manage their operations effectively and meet financial performance expectations to succeed.

Myth 10: The Cost of Maintaining a Public Company is Prohibitive

Fact: While there are costs associated with compliance and reporting, the benefits of access to capital, increased visibility, and business growth often outweigh these expenses.