REGISTRATION OF PUBLIC LIMITED COMPANY (PLC) IN INDIA

WHAT IS PUBLIC LIMITED COMPANY?

As per Section 2(71) of the Companies Act, 2013, a Public Limited Company means a company which is not a private company.

Public Limited Companies are subject to stringent corporate governance norms and disclosure standards to protect the interest of the Shareholders.

Characteristics of Public Limited Company:

1. Minimum Number of Members: Minimum 7 members are required to form a Company.

2. Minimum Number of Directors: Minimum 3 Directors are required to form a Company.

3. Name: Name must end with "Limited"

4. Commencement of Business: Can start business after receiving Certificate of Commencement of Business from ROC

5. Regulatory oversight: The company is governed by the SEBI and Companies Act, 2013.

6. Share transferability: Shares can be freely traded on stock exchanges, allowing investors to buy and sell them.

7. Perpetual succession: Continuity assured despite any change in membership.

TYPES OF PUBLIC COMPANY

1.      Listed Company:

A listed company, also known as a publicly traded company, is a company whose shares are listed on a Stock Exchange such as Bombay Stock Exchange (BSE) or National Stock Exchange (NSE). This means that the company's shares can be bought and sold by the general public, and the company is subject to certain reporting and regulatory requirements.

2.      Unlisted Company:

The company's shares are not listed on any recognized stock exchange in India, which limits the ease of share transfer compared to Listed Company, this reduces regulatory obligations.

PROCESS OF REGISTERING PUBLIC LIMITED COMPANY

1. Reservation of name by filing SPICe+ Part A form: SPICe+ Part A form is an online application for registering a new company in India. Ensure that the selected name is unique and must ends with the word "LIMITED" or "Ltd" .

2. Director Identification Numbers (DIN): Obtain a DIN for all proposed directors.

3. Obtain DSC (Digital Signature Certificate): Obtain a DSC for all proposed directors, which is required for filing and signing documents electronically.

4. PAN and TAN: Apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.

5. Bank Account: Open a current bank account in the company's name.

6. Filing SPICe+ forms: Spice+ form is an online application for incorporation, which is to be filed after name approval and it is consists of SPICe+ Part B, INC-33  (e-MOA), INC- 34 (e-AOA), Agile pro and INC-9, along with necessary attachments.

The entire process usually takes 10-15 working days, subject to ROC processing times and document accuracy.

7. Certificate of incorporation: Upon successful verification, the ROC issues the Certificate of Incorporation.

8. Compliance: Within 30 days of incorporation, file Form INC-20A (Commencement of Business) and obtain a certificate of commencement of business.

Documents required for incorporating:

1. ID proof (Aadhaar, PAN, etc.)

2. Address proof (utility bills, etc.)

3. Passport-sized photographs

4. Rent agreement or property documents (for registered office)

5. NOC (No Objection Certificate) from the landlord (if applicable)

WHY PUBLIC COMPANY IS BETTER THAN PRIVATE COMPANY?

1.      Access to Capital: Public companies can raise funds more easily by issuing shares to the public. This access to capital can fuel growth, fund new projects, and expand operations more effectively than private companies, which often rely on private investors or loans.

2.      Liquidity: Shares of public companies are traded on stock exchanges, providing liquidity for shareholders. This means that investors can buy and sell shares relatively easily, which can make investing in public companies more attractive compared to private ones, where shares are not as easily tradable.

3.      Employee Benefits: Public companies often offer stock options or other equity-based compensation, which can be a significant draw for top talent. This can help in recruiting and retaining skilled employees.

4.      Market Valuation: The market value of a public company is continuously assessed through its stock price, providing a transparent and real-time valuation of the company. This can be useful for various strategic decisions.

5.      Regulatory and Reporting Standards: Public companies face rigorous regulatory and reporting requirements, this transparency can be seen as a positive attribute, as it demonstrates a commitment to governance and accountability.

WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF PUBLIC LIMITED COMPANY?

Advantages:

1. Limited Liability: Shareholders' personal assets are protected, and they are only liable for the amount they invested.

2. Ability to Raise Capital: PLCs can raise large amounts of capital by issuing shares to the public.

3. Liquidity: Shares can be easily bought and sold on stock exchanges.

4. Professional Management: PLCs are required to have a board of directors and professional management, which can lead to better decision-making.

5. Enhanced Credibility: PLCs are often viewed as more credible and stable than private companies.

Disadvantages:

1. Complexity and Cost: Setting up and maintaining a PLC can be complex and costly.

2. Loss of Control: Shareholders may lose control of the company if they are not part of the majority ownership.

3. Public Scrutiny: PLCs are subject to public scrutiny and reporting requirements.

4. Risk of Takeovers: PLCs are vulnerable to hostile takeovers.

5. Regulatory Compliance: PLCs must comply with strict regulations and reporting requirements.

6. Share Price Volatility: Share prices can fluctuate rapidly, affecting the company's value.

FREQUENTLY ASKED QUESTIONS

Q1: What is a Public Limited Company (PLC)?

A1: A Public Limited Company (PLC) is a type of corporate structure that is owned by the public and its shares are traded on a stock exchange.

Q2: What are the minimum requirements to start a Public Limited Company?

A2: Typically, a Public Limited Company requires a minimum of seven shareholders, two directors and a minimum share capital (which varies by jurisdiction).

Q3: What is the difference between a Public Limited Company and a Private Limited Company?

A3: The main difference is that a Public Limited Company can raise capital from the public, while a private limited cannot. Additionally, Public Limited Company are subject to more regulations and reporting requirements.

Q4: How do Public Limited Company raise capital?

A4: Public Limited Company can raise capital by issuing shares, debentures, or bonds to the public through an initial public offering (IPO) or subsequent offerings.

Q5: What are the reporting requirements for Public Limited Company?

A5: Public Limited Company must file annual reports, financial statements, and other documents with regulatory bodies, such as the MCA.

Q6: Can anyone buy shares in a Public Limited Company?

A6: Yes, anyone can buy shares in a Public Limited Company through a stock exchange, subject to regulatory requirements.

Q7: How are Public Limited Company governed?

A7: Public Limited Company are governed by a board of directors, which is elected by shareholders.

Q8: What are the tax implications for Public Limited Company?

A8: Public Limited Company are taxed on their profits, and shareholders are taxed on dividends received.

Q9: Can a Public Limited Company be converted to a private company?

A9: Yes, but it requires approval from regulatory bodies and shareholders.

Q10: What are the advantages of listing on a stock exchange?

A10: Listing on a stock exchange provides access to capital, increased visibility, and liquidity for shareholders.