Public Limited Company

Introduction

IAn organization with limited obligations that offers to the general public is known as a public limited company. Anybody can purchase its stock, either publicly through an initial public offering (IPO) or via exchanges on a securities exchange. To distribute the company's actual financial well-being to its investors, a public limited company should be carefully managed.

The owners of a public limited company are known as the company's' shareholders' or 'stakeholders.' The entity's ownership interest is divided into various units known as "shares" or "equity shares." Numerous people or companies typically own these units of shareholdings.

It is defined under the Company Act 2013 of the Indian Penal Code(IPC). A Public Limited Company's members or shareholders are all subject to a limited liability. It means that if a company loses money by any means, its shareholders are responsible for the payment of the debts in proportion to the equivalent value of their shares.

Table of Contents

• Eligibility Checklist
• Benefits of a Public Limited Company
• Disadvantages
• Documents Required for Registration of an PLC
• Capital Required to start an PLC.
• Registration Process of a Public Limited Company in India.
• Compliances of an PLC
• Conclusion
• Frequently Asked Questions (FAQs)

Eligibility Checklist

1. According to the Companies Act of 2013, a public limited company is required to have 7 shareholders to be established.

2. To establish a Public Limited Company, you'll need at least three directors.

3. A share capital of Rs.5 lakh is required as a minimum.

4. When self-attested identity copies and proof of address are submitted, one of the Directors' DSC is necessary to be present.

5. All the Directors must have a DIN.

6. It is essential to submit an application for the name of the company to be chosen.

7. It is created an application that contains the company's main object clause. The specific goals of a company after incorporation will be defined by this object clause.

8. The form must be filed to the ROC along with all required documents, including a MOA, AOA, a completed DIR-12, Form INC 7, and Form INC -22.

9. The ROC requires the payment of registration fees.

10. The company should apply for a business commencement certificate after the ROC has given its approval.

Benefits of a Public Limited Company

1. A Distinct Legal Entity:A public limited company is regarded as a legal entity distinguishable from its shareholders.
The PAN, bank account, approvals, contracts, licences, assets, and liabilities of a public limited company are all permanent.

2. Funding: A public limited company (PLC) raises money from both individuals and financial institutions. Equity shareholding, preference shareholding, and debentures are all options for raising funds.

3. Shares are easily transferable: One of the most significant advantages of a Public Limited Company is that its shares can be easily transferred by a shareholder to other legal entities in India or abroad. The company's director can also be replaced in order to ensure the company's long-term survivability.

4. Restrictive Legal Responsibility: A Public Limited Company's shareholders have limited liability protection. In the case of an unforeseen liability, the repercussions would be limited to the company and would have no bearing on the shareholders.

5. Endless Opportunities: Because the company has a large capital base, it has a lot of growth opportunities, especially if it's an open-ended company.

6. Ease and Transperancy of Management: The Board of Directors are in charge of the company. The investors elect the members of the Board of Directors.

7. Minimal Risk: Because the shares are sold to the general public, the market's unsystematic risk is scattered out.

Disadvantages

Despite the fact that a public company is an excellent option for entrepreneurs seeking capital to start a business, it does have some drawbacks:

1. Regulations: An organisation must follow more laws and guidelines that are relevant to it, which is a difficult task. As a result, having to conform to such guidelines becomes challenging.

2. Command: To function as a Public Company, an organization must eventually open doors to the world. In this way, a lack of control over the organization's dynamic results from an insufficiency of possession.

3. Sharing of Records: It must reveal the organization's complete and true financial well-being to the general public. As a result, to ensure that there is a high level of transparenc

Documents Required for Registration of an PLC

To avoid legal complications, it is critical to submit all required documents for the registration of a Public Limited Company:

• Passport Sized Photographs Of all the Directors
• Aadhar Card, Voter Card, and PAN Card copies of all directors' identification cards
• All Directors' DSCs (Digital Signature Certificates)
• DIN (Director Identification Number) of all the Directors.
• If an office is rented, the lease agreement is required.
• If the office is a privately owned space, the property ownership documents must be provided.
• The water and electricity bills for the business address.
• Landlord's certificate of no objection(NOC).
• Articles of Association (AOA)
• Memorandum of Association (MOA)

Capital Required to start an PLC

A public limited company must have a minimum paid-up capital of Rs 5 lakh or an amount higher than that prescribed by the act.

• Registration Process of a Public Limited Company in India

Step 1: It is necessary to meet all legal requirements, including the number of directors, shareholders, as well as minimum paid-up share capital. Only if this step is completed will the remainder of the registration process be processed.

Step 2: The next step would be to get the DSC and DIN for the company's directors. A natural person, not an individual or an entity such as an LLP or a financial institution, can be a director. It is not necessary for the Director to be a Company shareholder.

Step 3:b A proper address of the Company is required to be identified as a registered office. The registered office address should be filed with the Company registrar in the jurisdiction in which the office is located. This office address should be entered correctly because the registered office address will be used for all business correspondence. The registration fee will be determined by the company's authorized capital contribution.

Step 4: The ROC must approve the Company's name before the registration process can begin. The name of a Public Limited Company must end with the word "Limited." This application will be submitted using the Ministry of Corporate Affairs' RUN form. In the event that a particular name is not available, it is preferable to provide a list of names in the priority order.

Step 5:Once the company's name has been approved, the MoA and AoA, that are the organization's most significant documents, should be signed.

Step 6:The documents must be submitted to the ROC for verification after they have been prepared.

Step 7:Following the completion of the verification, the ROC registers the company and issues the incorporation certificate, which includes the company's CIN.

Step 8:After receiving the COI, the business cannot be started right away. Within 180 days of receiving the COI, the company should apply for a certificate of commencement stating that all subscribers have paid their subscription fees.

Compliances of an PLC

As an Unlisted Company,

1. Section 173 of the Companies Act necessitates an unlisted Public Limited Company to hold at least 4 board meetings.

2. Section 148(3) of the Companies Rules, 2014, and also Rules 6(2) and 6(3A) of the Companies Rules, require the appointment of an auditor. CRA 2 is the form to use for this. It's worth noting that the auditor should be hired within 30 days of the Board meeting or 180 days of the financial year, whichever comes first. When a temporary vacancy occurs, it should be filled within 30 days.

3. In accordance with rule 16 of the Companies (Acceptance of Deposit) Rules, 2014, returns of deposits should be filed with the ROC under whose jurisdiction the company falls via Form DPT 3.

4. Section 203 of the Companies Rules, 2014, read with Rules 8 and 8A, legislates the appointment of the CFO, CS, or CEO within 30 days of the AGM, or six months in the case of a casual vacancy which ever occurs first. Form MGT 14 or Form DIR 12 is to be completed and submitted.

5. The AGM with the intent of announcing the dividend should be held in accordance with Section 96 of the Companies Act, 2013.

6. The CSR Committee should meet four times, with a minimum of 120 days between every meeting for consideration and approval of CSR practices. This is done in provisions of the Companies Act of 2013, the Companies Rule of 2014, and the Secretarial Standard.

7. In accordance with Section 184(1) of the Companies Act, 2013, read with Rule 9(1) of the Companies (Meetings of Board and its Powers) Rules, 2014, directors should disclose any financial interest in the Company via Form MBP 1.

As a Listed Company,

1. Section 121(1) of the Companies Act, 2013 mandates the holding of an annual general meeting. Once the AGM is concluded, Form MGT-15 should be filed.

2. The Company's Financial Statements must be filed in accordance with Section 137 of the Companies Act, 2013, and Rule 12(2) of the Companies (Accounts) Rule, 2014. The balance sheets, cash flow statements, Director's statement, Director's report, Auditor's report, and the combined financial state, which is prepared in XRBL, render up the financial statement (Extensible business reporting system). Form AOC 4 is used to file this.

3. Section 92 of the Companies Act necessitates this to be filed. 2014 in conjunction with Rule 11(1) of the Companies (Management and Administration) Rules. The annual return, that must be filed in Form MGT7 with the relevant ROC, contains data about the directors and shareholders.

4. The financial and director's reports should be adopted in accordance with Section 173 of the Companies Act and Secretarial Standard 1 of the Companies Act. Form MGT 14 is used to fill out the paperwork.

5. On or before September 30th of the financial year, the income tax returns must be filed with the IRS in form ITR 6.

6. SEBI's rules and regulations were included in the category. The regulations of 2015 must be followed by the listed companies.

Conclusion

A public restricted company is usually established to generate capital coming from external sources, such as the general public, for the reason of starting a business, business development, or mechanical advancement, etc.

A PLC, on the other hand, is more appropriate for large organisations with a broad perspective and significantly larger growth prospects than a modest shop nearby.

Frequently Asked Questions (FAQs)

1. What are a Public Limited Company's Liabilities?

The Public Limited Company deals with public funds and is required to adhere to more stringent regulations than a private limited company. Aside from regular income tax compliance, a public limited company must also comply with ROC/MCA, RBI, and other periodic and annual compliances. Furthermore, these regulatory responsibilities are to protect and promote the profits and well-being of all public limited company shareholders.

2. What are the requirements for establishing a public limited company?

You can form a public limited company anywhere, but you must have at least seven shareholders and three directors. Shareholders can also be Directors. The Companies Act of 2015 has completely eradicated the requirement for a minimum paid-up share capital of INR 5 lakhs.

3. Is it possible for a foreign national to serve as a director of a public limited company?

In an Indian public limited company, an NRI or foreign national can be a shareholder or director. Aside from the requirements of being a responsible adult, a person seeking to become a director must have an MCA-issued DIN.

4. Is it possible to register a startup as a Public Limited Company?

No, a public limited company is ineligible to be a start up.

5. How does a foreign company's conglomerate get to be a public limited company in India?

A copy of the Holding Company's Board resolution approving the proposed Indian Company's investment and authorising a person to sign the incorporation papers on behalf of the company, duly attested by an officer of the Indian Embassy in the foreign country where the registered office is located, is also required to be attached with the papers in the case of a wholly owned subsidiary.

6. Is it possible for a minor to become a company director?

No, the Act stipulates that the director must be at least 18 years old.

7. Is there any obligation for a director of a Public Limited Company to pay the company's creditors?

No, because a company is a limited liability entity, a member's scope is limited to the face value of the shares he or she owns. He is under no obligation to contribute anything to the company's creditors once the full face value has been paid.

8. Is it possible for a company's shareholder to participate in the company's business and management?

A company's shareholders do not have the right to participate in the day-to-day management of the company's operations. This ensures that ownership and management are kept separate.

9. Who is the most influential person in charge of a Public Limited Company?

The Board of Directors has ultimate decision-making authority in a company, and all policy decisions are made by majority vote at the Board level.

10. Is a Public Limited Company's Board Meeting required?

Yes, a public company is required to hold a statutory meeting and file a Statutory Report with the Registrar of Companies. It's worth noting that a meeting of a Public Limited Company can only be called a meeting if the requisite quorum of members did attend, unless the meeting is deemed invalid.