As per Section 2(71) of the Companies Act, 2013 a public company is –
The public Limited company can be of two types – Listed Company or Unlisted Company.
- A company which is not a private company.
- The company being subsidiary of a company, which is not being a private company it shall be a public company for the purposes of the act.
A public limited company (Listed) is an entity that has its shares listed in a stock exchange. Shares are offered in the stock exchange to raise Capital.
Whereas, Public Unlisted Company is an entity whose shares are not listed on stock exchange, but held by public at large.
Also, if the company is listed on a stock exchange market, it can increase their potentials of being targeted by hedge funds, venture capitalists, mutual funds, and other types of traders and investors. Being a public Limited company also means that the risk of running a business is spread out.
By giving people the ability to buy into the business, the public Limited company is also giving them the opportunity to buy into the risk, thus reducing the risks which the Public Limited Company shoulders.
9 BENEFITS OF A PUBLIC LIMITED COMPANY
A public limited company has many benefits when it comes to operations and profitability. One of such benefits is the increased ability of such a firm to raise capital financing via selling public shares. Selling shares to the public in this situation means that there is no entry barrier to investing in such a firm, and as such, any person can choose to join the company.
- Limited Liability – The members or shareholders of a Public Limited Company has a limited liability.
- Separate Legal Entity – Public limited company legal entity are separate than its shareholders/promoters.
- Perpetual Existence – Public limited company existence will go for ever and its existence will not be effected by the death of shareholders, directors or transfer of shares to others.
- Capacity to Sue and to be Sued – Public limited company can take legal action against another and also other person can take legal action against company separate from directors, shareholders & promoters.
- Ownership of property – Public limited company can sale, purchase and own the property like individual.
- Transferability of Shares – Shareholders can sell their shares according to their convenience.
- Improved Capital – As the public is allowed to purchase shares of a Public Limited Company, thus the capital will automatically raise.
- Lesser Chances of Risk –The company can sell it’s shares which leads to the reduction in risks.
- Shares can be listed – PLCs can choose to be listed or delisted on a stock exchange. Unlike other company types, PLCs are required to always publish their financial health status, plus they are held down by numerous regulations.
INCORPORATE COMPANY IN 4 STEPS
I. Name Application –
In this step, the name of the company is checked and verified as per the requirements of the Ministry of Corporate Affairs (MCA). The name of the company must not be similar to any other name. Once confirmed we then apply for name reservation via Spice Part A.
II. Applying for DSC –
In the next step, the applicant must apply for a Digital Signature Certificate. The digital signature certificate would provide authenticity for processing electronic documents. Apart from this, the DSC also helps in carrying out electronic signatures as per the requirements of the act.
III. Filing SPICe Part B Form –
Once the name of the public limited company is approved by relevant authorities, then the applicant would go in for filing SPICe form for securing the certificate of Incorporation. When the SPICe form is filed by the applicant, the DIN number would also be allocated to the directors of the company.
We can also apply for EPF, ESIC, GST, PAN, TAN, PT etc. from this single form.
IV. Incorporating the Company –
After verifying the process, the MCA and Registrar of Companies will issue the certificate of incorporation of the public limited company. This certificate as a legal document to prove the status of the public limited company.
DOCUMENTS REQUIRED FOR PUBLIC LIMITED COMPANY INCORPORATION
Identity Proof of Directors and Shareholders
Address proof of Directors and Shareholders
- PAN Card for Indian Nationals (Mandatory)
- Passport for Foreign Nationals (Mandatory)
- Proof of nationality for Foreign Nationals
- Proof of Identity (Voter ID/Passport/Driving License) (any one)
- Resolution of the board of company / LLP for authorization of director/partner
- 2 Passport size photos.
- Digital Signatures of all subscribers & directors
Proof of Registered office
- Bank statement/Electricity/Telephone/Mobile bill) (not older than two months) (any one)
- Conveyance/ Lease deed/Rent Agreement etc. along with rent receipts (any one)
- Copy of the utility bills (Telephone/Gas/Electricity bill) (not older than two months) (any one)
- NOC from Landlord
All the Documents in case of Foreign Director should be additionally complied as follows:
- Notarized (if residing in commonwealth countries)
- Notarized & Apostilled (if residing in country which is signatory to Hague convention)
- Notarized (If not covered in above categories)
Can a Public limited Company can covert itself into Private limited Company?
In situations where a public company no longer wishes to operate within the business model, there is an option for it to return to the private limited company. This can be done by buying back all outstanding shares form the current shareholders. The company is delisted from the stock exchange where it has registered once this purchase is done. It will then return to operate as a private limited company.
A Public Limited Company is established to come up with capital from external sources i.e. the public for running the business growth, international expansion, technological development, etc.
Public Limited Company is a business structure for such entrepreneurs who might be planning to operate in a large scale.
These forms of business structures are considered by companies that have a large form of business plans. This business structure raises capital from the public by issuing them shares. However, the rules and regulations of a Public Limited Company are stricter than other companies.
A Public Limited Company is appropriate for massive organizations that have a better growth prospect instead of a small scale business.
Team Udyog Buddy will help you to incorporate your Public Limited Company with the best professionals who will save your back from all the hectic paperwork required.
To avail all the Compliance services for your Company/ LLP / OPC /Startup Advisory/IPR/GST/ Drafting etc. our team of professionals will guide you.
To avail any of the services and obtain a position Over Your Competitors Call/Whatsapp +91 9301789019
or email at [email protected]
. We would be happy to assist you.