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Characteristics of Public Limited Company

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Last Updated on June 8, 2024 by Kanakkupillai

The Companies Act 2013 directs the foundation and working of a public limited company. A public limited company offers limited coverage to the overall population and has limited liability. Its stock can be procured by anybody, either privately through an Initial Public Offering (IPO) or using exchanges on the securities exchange. It is completely controlled and is expected to distribute its actual monetary health to its investors.

Prerequisites for Enlistment of a Public Limited Organization

Different rules and regulations are recommended under the Act for developing a public limited company. This is the very thing that you should remember while registering a public limited company:

  • A minimum of 7 investors are expected to shape a public limited company.
  • A minimum of 3 directors is expected to frame a public limited company.
  • A minimum approved share capital of Rs. 1 lakh is required.
  • A Digital Signature Certificate (DSC) of one of the directors is required while submitting self-attested witness to duplicates of personality and address evidence.
  • Directors of the proposed organization will require a Directors Identification Number (DIN).
  • According to the Company Act and Rules, a business must use its correct name.
  • Essential documents, such as the Memorandum of Association (MOA), Articles of Association (AOA), and the DIR-12 form, must be duly filled out for a company’s registration.
  • Payment of the recommended registration charges to the ROC is required.

Procedure for Registration of a Public Limited Company

Stage 1: Digital Signature Certificate (DSC)

It is required to file forms on the MCA portal as the registration process of a company is entirely online. DSC is mandatory for all proposed directors and subscribers of the memorandum and articles of association.

Step 2: Director Identification Number (DIN)

It is a recognizable proof number concerning a chief; it must be secured by anybody who expects to turn into a chief in an organization. Even with the name and address verification, the racket of a proposed chief must be referenced in the organization enlistment structure.

Step 3: Registration on the MCA Portal

A finished SPICe+ form must be submitted to apply for company registration at the MCA entrance. To fill the SPICe+ structure and present the necessary records, the director of a company needs to enrol on the MCA portal. After the registration cycle, the director will get access to the MCA portal administrations, which involves recording e-forms and reviewing public documents.

Step 4: Certificate of Incorporation

The Registrar of Companies (ROC) will review the application and the relevant documents after it is submitted. After checking the application, he will give the Declaration of Incorporation of the Public Organization. After getting the certificate of Incorporation from the ROC, the company should also apply for the ‘Certificate of business commencement.’

Documents Required for Incorporating a Public Limited Company

  • Evidence of identity of all the investors and directors.
  • Provide evidence of the address of all the directors and the investors.
  • PAN number of all the investors and chiefs.
  • Service bill of the proposed office, for example, proposed registered office for the company.
  • A NOC (No Objection Certificate) from the property manager where the company’s office will be arranged.
  • All directors’ Director Identification Number (DIN).
  • Digital Signature Certificate (DSC) of the directors.
  • Memorandum of Association (MOA).
  • Articles of Association (AOA).

Characteristics of a Public Limited Company

S.No. PARTICULARS PUBLIC LIMITED COMPANY
1. Minimum members 7
2. Maximum members No maximum limit
3. Commencement of business They have to obtain certification of incorporation and the certification of commencement.
4. Minimum subscription Rs. 5,00,000
5. Issue of prospectus Can make a Prospectus for the invitation of its shares to the public. They have to make a Prospectus or statement in lieu of a Prospectus for an invitation of subscribe of shares.
6. Transfer of shares Easily transferrable within the public
7. Statutory meeting They have to hold statutory meeting

Within six months of its commencement

Of business

8. Articles of association They can adopt a table under

schedule I of Companies Act, 2013

9. No. of directors 3
10. Consent of directors Required in writing
11. Qualification shares A minimum share is required

To qualify as directors

12. Retirement of directors Minimum two-thirds of directors

Retire by rotation

13. Name of the company Must contain Ltd at the end
14. Meeting quorum 5
15. Inspection of accounts Open for public inspection.
16. Annual return They have to file only return

and no declaration

Board of Directors and Shareholders

In a public limited company (PLC) in India, the interaction between the Board of Directors and shareholders is a significant factor in determining the company’s governance structure. Here are the fundamental components of this cooperation:

  • Separation of Powers: While shareholders vote on significant decisions, the board manages day-to-day operations.
  • Director Election: Shareholders choose board members, including chief and non-leader directors.
  • Voting by Shareholders: Shareholders exercise voting rights, particularly in significant choices.
  • Proxy Voting: Shareholders can appoint proxies to vote on their behalf.
  • Annual General Meeting: AGMs give shareholders a stage to commit and make decisions.
  • Transparency: Severe revealing and exposure necessities guarantee transparency.
  • Dividend Decisions: Dividends, assuming that announced, are supported by shareholders at AGMs.

Benefits of Public Limited Company in India

  • Capital Access: PLCs can raise significant capital by offering offers to people in general and giving bonds, empowering them to embrace aggressive tasks and extend their activities.
  • Limited Liability: Shareholders appreciate limited liability, safeguarding their own resources if monetary difficulties arise.
  • Transferability of Shares: Shareholders can easily buy and sell shares, giving liquidity and adaptability to Shareholders.
  • Upgraded Credibility: Public corporations frequently have a more elevated level of credibility and trust among clients, providers, and partners.
  • Getting Talented: PLCs can attract top talent by providing stock options and other rewards tied to share performance.

Drawbacks of Public Limited Companies in India

  • Administrative Difficulties: PLCs face complex regulatory responsibilities that frequently necessitate significant expenditures and time commitments.
  • Dilution of Control: Because of the broad distribution of ownership interests, shareholders in PLCs might experience diminished control over corporate activities.
  • Intense Public Scrutiny: Public firms are exposed to persistent public assessment, possibly bringing about unfriendly exposure and requests to achieve quick monetary goals.
  • Disclosure Requirements: Broad reporting and disclosure requirements might uncover delicate data to contenders.
  • Cost of Going Public: Legal, accounting, and marketing expenses can make the initial public offering (IPO) process costly.

Conclusion

A few characteristics characterize a public limited company (PLC) in India. These incorporate limited liability, public offers, obligatory capital requirements, a specific legitimate persona, administration by governing directors and investors, adherence to administrative orders, monetary transparency, share adaptability, admittance to capital markets sectors, and a critical degree of public examination.

While PLCs give benefits, such as capital openness and limited liability, they likewise face difficulties, such as exploring complex guidelines and uplifting public attention. An extensive understanding of these characteristics is essential for entrepreneurs, investors, and corporate partners, engaging them to make informed choices regarding business construction and the board. PLCs are crucial in the worldwide economy, driving development, cultivating open positions, and aiding financial advancement.

We hope that our article has been productive and helpful to you. If you need any further guidance, you can contact www.kanakkupillai.com

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G.Durghasree B.A.B.L (Hons)

G Durghasree B.A.B.L (Hons) is a registered trademark attorney with extensive experience as an Advocate for a period of 8 years. She possesses expertise in trademark law, including trademark filing and trademark hearings. Additionally, she is skilled in contract drafting and reviewing, providing legal advice and opinions, particularly in the areas of Company Law, Insolvency and Bankruptcy Code (IBC), and Goods and Service Tax Law (GST). Her experience encompasses both litigation and non-litigation aspects of these laws.