A Public Limited Company (PLC) is a type of company that can offer its shares to the general public. These shares can be bought and sold on a stock exchange, allowing the company to raise capital from a wide range of investors. PLCs are typically larger companies with more stringent regulatory requirements compared to private limited companies.

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Key Features of a Public Limited Company

• Public Ownership: Shares can be offered and traded publicly on a stock exchange.

• Limited Liability: Like private limited companies, the liability of shareholders is limited to the extent of their investment.

• Separate Legal Entity: A PLC is a legal entity separate from its shareholders and directors.

• Perpetual Succession: The company's existence is not affected by changes in shareholders or directors.

• Minimum Shareholders: A minimum of seven shareholders is required. There is no limit on the maximum number of shareholders.

• Minimum Directors: A minimum of three directors is required, with at least one being a resident of India.

• No Minimum Capital (Currently): While there used to be a minimum paid-up capital requirement, the current Companies Act, 2013 does not prescribe a minimum. However, a substantial authorized capital is usually expected.

• Name: The company name must end with "Public Limited Company" or "Limited".

• Greater Regulatory Scrutiny: PLCs are subject to more stringent regulations and reporting requirements to protect public investors.

• Transferability of Shares: Shares can be freely transferred on the stock exchange.

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Advantages of a Public Limited Company

• Access to Large Capital: Easier to raise significant funds by issuing shares to the public.

• Enhanced Liquidity for Shareholders: Shareholders can easily buy and sell their shares on the stock exchange.

• Increased Credibility and Prestige: Being a public company can enhance the company's image and attract more business.

• Growth and Expansion Opportunities: Access to capital facilitates expansion and diversification.

• Wider Shareholder Base: Spreads risk among a larger number of investors.

• Potential for Higher Valuation: Publicly traded companies often have higher valuations.

• Easier Mergers and Acquisitions: Shares can be used as currency for acquisitions.

• Exit Strategy for Founders: Going public provides an opportunity for founders to liquidate their holdings.

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Disadvantages of a Public Limited Company

• High Setup and Compliance Costs: Establishing and maintaining a PLC involves significant legal, administrative, and compliance expenses.

• Loss of Control: Original owners may lose control as ownership becomes more dispersed.

• Increased Regulatory Burden: Strict adherence to regulations and reporting requirements is mandatory.

• Public Disclosure: Financial information and other sensitive data must be disclosed to the public, reducing confidentiality.

• Pressure for Short-Term Performance: Public companies face constant pressure from shareholders and analysts to deliver short-term results.

• Vulnerability to Market Fluctuations: Share prices can be volatile and affected by market conditions.

• Risk of Hostile Takeovers: Publicly traded companies are susceptible to hostile takeover bids.

• Shareholder Expectations: Managing and meeting the expectations of a diverse shareholder base can be challenging.

 

Registration Procedures for a Public Limited Company in India

The registration process is primarily online through the Ministry of Corporate Affairs (MCA) portal and involves the following steps:

1. Obtain Digital Signature Certificate (DSC): At least one of the proposed directors needs a DSC to digitally sign the incorporation documents.

2. Obtain Director Identification Number (DIN): All proposed directors must have a DIN. This can be applied for through the SPICe+ form during incorporation.

3. Name Approval: Apply for the company name using the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form (Part A) on the MCA portal. You can propose up to two names in order of preference. The name must end with "Public Limited Company" or "Limited".

4. Prepare Memorandum of Association (MOA) and Articles of Association (AOA): These are the company's charter documents. The MOA defines the company's objectives, and the AOA contains the rules and regulations for its internal management.

5. Prepare Other Necessary Documents:

   • Identity and Address Proof of Directors and Shareholders: PAN card, Aadhaar card, passport, voter ID, driving license, utility bills (not older than 2 months), bank statements.

   • Proof of Registered Office: Rental agreement with a No Objection Certificate (NOC) from the landlord or ownership documents (utility bill not older than 2 months).

   • Declaration and Consent of Directors: Form DIR-2 (consent to act as director) and Form INC-9 (declaration by the proposed directors).

   • Declaration by the professional (Chartered Accountant, Company Secretary, or Advocate) certifying compliance.

6. File Incorporation Documents with MCA: All the above documents are attached to the SPICe+ form (Part B), along with the MOA (SPICe-MOA) and AOA (SPICe-AOA), and uploaded to the MCA portal. The DSC of at least one director and the certifying professional will be required for signing.

7. Apply for PAN and TAN: The application for the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) is usually integrated with the SPICe+ form.

8. Certificate of Incorporation: Once the Registrar of Companies (RoC) is satisfied with the documents, they will issue the Certificate of Incorporation, which officially registers the Public Limited Company.

9. Post-Incorporation Formalities:

   • Open a Bank Account: In the company's name.

   • Appointment of First Auditor: Within 30 days of incorporation.

   • Filing Form INC-20A (Commencement of Business): To be filed within 180 days of incorporation, declaring that the company has received the subscription money.

   • Obtain Necessary Licenses and Registrations: Based on the business activities.

   • Comply with Ongoing Filing Requirements: Annual returns (Form MGT-7), financial statements (Form AOC-4), etc.

 

Key Requirements for Registration

• Minimum of 7 shareholders.

• Minimum of 3 directors, with at least one resident in India.

• A valid and unique company name.

• A registered office in India.

• Digital Signature Certificate (DSC) for at least one director.

• Director Identification Number (DIN) for all directors.

• Preparation and filing of MOA and AOA.

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Post-Incorporation Requirements

• Open a Current Bank Account

• Appoint Auditor within 30 days

• Allotment of shares to subscribers

• File Form INC-20A (declaration for commencement of business)

• Apply for GST Registration, Shops & Establishment License, etc. (if needed)

• Maintain proper bookkeeping and annual ROC filings

• For listing, follow SEBI regulations and file an IPO through a registered merchant banker

 

Mandatory Documents

• PAN & Aadhaar of all directors

• Passport-size photos

• Proof of registered office

• NOC from premises owner (if rented)

• Utility bill (not older than 2 months)

• MOA & AOA drafts