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Public Limited Company

Public limited company is essentially a form of business organization that operates as a separate legal entity and whose shares are listed and traded at registered stock exchanges.

Rs 25,000/- onwards

What is a public limited company?

Public limited company is the largest form of business in India. A public limited company can be listed on stock exchanges and can thus invite funds from public. Also, there is no restriction as to the maximum no. Of shareholders in a public limited company.

Advantages

  1. No Restriction on share transfer

    No Restriction on share transfer

    There is no restriction on transferability of shares. A shareholder can transfer his shares to any person.

  2. Limited liability

    Limited liability

    A shareholder is liable only to the extent of unpaid amount on his holding.

  3. Separate Legal Identity

    Separate Legal Identity

    A company enjoys separate legal identity unlike partnership firms.

  4. Greater borrowing power

    Greater borrowing power

    Companies have better avenues for borrowing funds unlike other forms of business.

  5. Access to public funds

    Access to public funds

    Public company can invite public to subscribe its shares unlike a private limited company.

  6. Perpetual Existence

    Perpetual Existence

    A company continues to exist perpetually irrespective of the status of the owner.

Disadvantages

  1. Loss of control

    Loss of control

    Control over the company’s affairs seizes to exist in few hands.

  2. Strict legal formalities and compliances

    Strict legal formalities and compliances

    Strict legal formalities and regulations are to be complied with by public limited companies.

  3. share

    Sharing of profits

    Profits of the company are shared amongst many shareholders thereby decreasing each person’s share.

Procedure for Registration

Incorporating a company is now easier and less time consuming with the introduction of INC29 form.

FAQs

How many persons are required to incorporate a public limited company?

A public limited company is required to have minimum 7sharehodlers.

How many directors can be appointed?

A public limited company should appoint minimum 3 directors, it can have a maximum of 15 directors.

What is the minimum capital required to incorporate a public limited company?

Minimum capital of Rs.5 lakhs is required to incorporate a public limited company.

What are the documents required for registration?

ID proof and residence proof of all the proposed directors, PAN card is mandatory for Indian nationals. No objection certificate from the owner of registered office or lease agreement must be produced.

What is a digital signature certificate (DSC)?

Digital signature is process to authenticate and validate records electronically. DSC is required for every director of the company as the Ministry of Corporate Affairs (MCA) mandates digital signature of directors on some documents.

What is Director Identification Number (DIN)?

DIN is a unique identification number which is allotted to all the directors existing or proposed. DIN can be obtained by filing e-form DIN1 in MCA portal.

What are the requirements to be a director?

Any person above 18 years can become a director. Non-residents can also become director of Indian companies

What are the requirements with regard to the company’s name?

Company’s proposed name should be unique i.e., it should not be identical to any existing name. Names that infringe others’ rights, trademarks or patents are likely to be rejected by ROC.

What is authorized capital fee?

Authorized capital of a Company is the amount of shares a company can issue to its shareholders. Companies have to pay authorized capital fee to the government so as to be able to issue shares. Companies have to pay authorized capital fee for a minimum of Rs.5 lakh.

Can a private limited company be later converted into public limited company?

Yes, Companies Act 2013 provides rules for converting a private limited company into a public limited company.

Can a foreign national be a director in a private limited company?

Yes, a foreign national can become director of a private limited company. Atleast one director in a company should be resident Indian.

Can NRIs or foreign nationals hold shares of a private limited company?

Yes, NRIs / Foreign Nationals / Foreign Companies can hold shares of a Private Limited Company subject to Foreign Direct Investment (FDI) Guidelines.

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