A public limited company, India is the standard legal designation of a company which offers shares to the general public and has the benefit of limited liability. It requires a minimum of 7 shareholders to form such a company, assuming that it has a lawful purpose.
To start a business with a single owner Proprietorship Firm is the option for entrepreneurs but unlike a company proprietor cannot enjoy the advantage of limited liability.
It is a company whose securities are traded on a stock exchange and can be bought and sold by anyone. Public companies are strict in their regulation, and are required by law to publish their complete and true financial position to enable the investors to determine the true worth of its stock (shares).
Key characteristics of Public Limited Company
Headed by Board of Directors
Easy trading of shares (between members and people trading in stock exchange)
Strictly regulated by the law
The benefits of a Public Limited Company to Indian Owner, India are enough to attract an entrepreneur. Here, transferability of shares is easy and hence it provides the scope to Public Limited Company to raise capital from General Public through selling its shares or debentures or accepting fixed deposits. After observing Public Limited Company, advantages and disadvantages, one can easily opt for Public Limited Company.
Public Limited Company Advantages and Disadvantages
Large capital can be raised in case of Public Limited Company. Limited liability and freely transferable shares also add up to the advantages of public limited company. But sometimes a large no of legal formalities can serve as a disadvantage also.
How to form a Public Limited Company?
Obtain DSC & DIN
Apply for name approval
Submission of application of incorporation along with the necessary documents to Registrar Of Companies
Apply for certification for commencement of business
Public Limited Company Documents Required
ID Proof and Address Proof for all Partners
PAN Card is Mandatory
Latest utility bill (electric bill/telephone bill) or latest tax receipt for the property to be used for registered office
DSC Form Download Format
Minimum three directors are required to set up a Public Company and the maximum amount cannot exceed beyond fifteen. Even an NRI or Foreign National can be a Partner after obtaining a DPIN (Designated Partner Identification Number. At least, one of the partners have to be a resident Indian citizen.
Minimum Capital Required: Rs.5,000,000/- This limit is not applicable for companies having licence under section 25.
Minimum capital requirement for a public limited company is Rs. 5,00,000.
Minimum number of members or shareholders required is seven.
Must have minimum number of at least 3 directors.
a. Shares of a public limited company are freely transferable and no need to take any one’s consent for such transfer.
b. The liability is limited to the face value of the shares the shareholder’s own.
c. Shareholders do not have the right to participate in the day to day management of the business.
PAN and Residence proof of Directors in the company.
Copy of Aadhar Card or Voter Identity card.
Copy of Rental Agreement or Electricity Bill card of the business place.
Bank Statement / Cancelled Cheque of the business.
a. Obtaining Digital signature certificate (DSC) and Director Identification number (DIN).
b. Approval of name from Ministry of Corporate Affairs (MCA), Government of India.
c. Company registration.
A registration certificate issued by the registrar of company will be valid throughout the life of the company.
15-20 working days.
Digital Signature Certificates (DSC) are the electronic format of physical or paper certificates. It is mandatory to sign some electronic forms/returns filed with The Ministry of Corporate Affairs (MCA). So DSC is required for all directors of the proposed company.
As a public limited company deals with public money it has to make rather heavy compliances strictly, which are bulkier than those performed by a private limited company. Apart from the regular compliances related with income tax, there are many periodic and annual compliances to be made by a public limited company with ROC/MCA, SEBI, and RBI etc.
Compare your alternatives
Below is the comparison between Sole proprietorship, Partnership, Private Limited Company, Limited liability partnership, One person company and Public limited company
Small manufacturers and traders
Professional services firm
2 Shareholders / Directors
1 Director and 1 nominee
Few tax benefits
Few tax benefits
Few tax benefits
Allowed with prior approval of RBI and FIPB approval