A Public Limited Company is a company whose securities are traded on a stock exchange and can be bought and sold by anyone. Public companies are strictly regulated and are required by law to publish their complete and true financial position so that investors can determine the worth of its stock.
Requirements for Registration of Public Limited Companies
- A minimum of 7 shareholders are required to register a public limited company.
- A minimum of 3 directors are required to register a public company while the maximum can be 50. However, there is no limit on the number of shareholders.
- A maximum paid up capital of Rs.5 lakh is required.
- Digital signature certificate (DSC) of one of the directors is required while submitting self attested copies of identity and address proof.
- Directors of the proposed company will need a Director Identification Number (DIN).
- An application stating the main object clause of the company has to be made. It will define the objective of the company after incorporation.
- Submission of application to the Registrar of Companies (ROC) along with the required documents like MOA, AOA, duly filed Form DIR -12, Form INC – 7 and Form INC – 22.
- Payment of the prescribed registration fees to the ROC.
- After obtaining an approval from the ROC, the company should apply for the ‘certificate of business commencement'.
Advantages of Public Limited Registration
- Business Opportunities:
Being listed on a stock exchange ensures that mutual funds, hedge funds and other traders notice the business of the company. This provides better business opportunities to the company.
- Distribution of Risk: Since shares of a public limited company are sold to the public at large, risk due to uncertainty in business is evened out.
- Limited Liability: The shareholders of a public limited company aren’t personally responsible for the debts of the company. Their liability is limited to the value of shares held by them.
- More Capital: As shares are offered to the general public, anyone can invest in a public limited company. Hence, a public limited company is able to raise more capital.
- Separate Legal Entity: A Public Limited Company is an artificial person in the eyes of law. Its existence does not depend on the death or cessation of its owners. It continues to exist till it is legally dissolved.