Overview
A Public Limited Company offers the benefits of limited liability and the ability to sell shares to the general public to raise capital. This structure is ideal for large businesses requiring substantial capital and is registered under the Companies Act, 2013. Public limited companies can list themselves on the stock market and offer shares to the public through Initial Public Offerings (IPO). Learn about the benefits, process, and requirements for registering a Public Limited Company.
A public company is an entity with limited liability features that offers shares to the general public to raise equity capital. Governed by the Companies Act, 2013 and registered under the Ministry of Corporate Affairs, a public company can be incorporated with a minimum of seven members, with at least three serving as directors.
Minimum Requirements for Public Limited Company Registration
i. Minimum Number of Members: A public limited company must have at least seven members to be incorporated.
ii. Minimum Share Capital: The company must have a minimum share capital of 5 lakh rupees.
iii. Minimum Number of Directors: At least three directors are required to manage the company.
Advantages
1. Raising Capital through Public Issue of Shares:
The biggest advantage of a public limited company is the ability to raise capital by selling shares to the public. This allows the company to attract a large number of investors, potentially raising more funds than a public company. Listing on a recognized exchange can also attract investment from hedge funds, mutual funds, and other institutional investors.
2. Other Finance Opportunities:
Public limited companies often have better access to various sources of finance. They may find it easier to secure loans from banks and other financial institutions, often with more favorable terms. Being listed on a stock exchange can improve the company's creditworthiness, reducing the cost of borrowing.
3. Growth and Expansion Opportunities:
With increased access to capital, public limited companies can pursue new projects, enter new markets, make acquisitions, invest in research and development, and pay off or refinance existing debt. This financial flexibility supports long-term growth and expansion.
4. Prestigious Profile and Confidence:
Being a public limited company can enhance a company's prestige and perceived stability. The 'plc' designation often adds to the company's reputation, influencing how customers, suppliers, and employees view the business. Public companies are more likely to receive media attention and investment interest, leading to better brand recognition and potentially higher sales.
5. Transferability of Shares:
Shares of a public limited company are easier to transfer compared to those of a public company. This liquidity can make the company more attractive to investors, as they can buy and sell shares more easily. This ease of transfer can also simplify the process of handling a shareholder's death or other changes in ownership.
6. Exit Strategy:
Going public provides founders with more options for exiting the business in the future. The increased visibility and liquidity of shares can attract potential buyers and increase the chances of a successful sale or merger.
Improved Documents Required for registration
According to the Companies Act, 2013, the following documents are required to register a public limited company. You must provide proper identity proof for members and directors, along with a valid address proof of the business office. Note that you can use a residential address for company incorporation if you do not own a commercial property. Here are the documents needed:
1. Passport-size photographs of the members
2. Copy of PAN Card of the members
3. Copy of Aadhar Card or Voter ID
4. Bank statement (not older than two months)
5. Proof of registered place of business
6. No Objection Certificate (NOC) from the property owner
Documents You’ll Receive Post Incorporation
1. Certificate of Incorporation
2. Permanent Account Number (PAN) of the company
3. Tax Deduction or Collection Account Number (TAN) of the company
4. Articles of Association (AoA)
5. Memorandum of Association (MoA)
6. Director Identification Number (DIN)
7. Digital Signature Certificate (DSC)
8. EPF and ESIC registration documents
9. Company Master Data
Registration Fees
The total cost of Public Limited Company registration in India, including government and professional fees, starts from ₹16,699 and typically takes around 7-8 working days. Here’s a breakdown of the costs:
- Digital Signature Certificate (DSC): ₹7,000
- Government Fee: ₹1,800
- Professional Fee: ₹3,199
- Total Cost: ₹16,699*
*Important Note: The total incorporation fees for a Public Limited Company vary from state to state. Please refer to the map for state-wise prices.
Time Required for Registration of Public Limited Company
On average, it takes around 7-8 working days to register a Public Limited Company in India, subject to document verification by the Ministry of Corporate Affairs (MCA).
Company Registration Process
Registering a company in India involves a straightforward five-step company registration process:
Step 1: Acquire a Digital Signature Certificate (DSC)
Every director and shareholder must secure a Digital Signature Certificate (DSC) issued by the Controller of Certification Agencies (CCA). This involves providing essential details such as passport-sized photos, PAN, Aadhaar Card, phone number, and email address. Foreign nationals should also furnish notarized and apostilled documents, if applicable.
Step 2: Director Identification Number (DIN)
Obtain a Director Identification Number (DIN) if you intend to be a director in the company. DIN is essential for directors and needs to be provided in the registration form.
Step 3: Name Reservation for the Company (SPICe+ Part A)
Begin by completing the SPICe+ Part A form to secure a unique company name. This entails selecting the company type, class, category, and sub-category, specifying the primary division of industrial activity, and offering a comprehensive business description. You'll need to propose two names for approval.
Step 4: Submission of Company Details (SPICe+ Part B)
Provide comprehensive information concerning capital, registered office address, subscriber and directors' details, stamp duty, PAN and TAN application, and necessary attachments.
Step 5: Preparation and Submission of Incorporation Forms (SPICe+ MOA and AOA)
Draft the Memorandum of Association (MOA) and Articles of Association (AOA) containing crucial company details. Obtain digital signatures from subscribers and professionals before submitting these documents to the MCA for approval.
Additionally, file the AGILE-PRO-S form to register for GST, EPFO, ESIC, a bank account, and a shop and establishment license (which may be state-dependent).
Certificate of Incorporation
Upon successful document verification, the MCA will issue the Certificate of Incorporation (COI) with the Company Identification Number (CIN), PAN, and TAN.
