Public Limited Company

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What is Public Limited Company?

  • A Public Limited Company is incorporated as per the provisions of Company Act 2013 which has limited liability and offers shares to the general public and enjoys the benefits of limited liabilities for its members and has rights to sell its shares for raising the capital of the company.
  • It's stock can be acquired by anyone, either privately through (IPO) initial public offering or via trades on the stock market. A Public Limited Company is strictly regulated and is required to publish its true financial health to its shareholders.
  • It can be incorporated with a minimum number of three directors and has more stringent rules and regulations as compared to a Pvt. Ltd. Company.
  • Public limited companies is an ideal choice for the small and medium scale enterprises who wish to raise the equity capital from the general public.
What is Public Limited Company
Process

Incorporation Procedure of Public Limited Company

Overview of Web forms A new Web based Form named 'SPICe+' (pronounced as 'SPICe Plus') is an integrated Web based form offering multiple services like 'name reservation', incorporation, 'DIN allotment', mandatory issue of PAN, TAN, EPFO, ESIC, Profession Tax (Maharashtra), and 'Opening of Bank Account' & GST (Optional).
Name Reservation Company has two option available either first reserve the name in Spice+ Part-A and then apply in Spice+ Part-B or directly apply name with incorporation form then challan will not be required. In case company reserves the name first then challan needs to be paid of Rs. 1000 and SRN will be generated.
Prerequisites for a public company • There shall be at least 7 members/shareholders in the public company. There is no upper limit for the maximum no. of the shareholder/member.
• There shall be at least 3 directors in the company. One of the directors must be Resident of India i.e. in India not less than 182 in the previous calendar year.
• The name of a Public Limited Company shall have suffix “Limited” at the end of the name.
Filling Part B of Spice+ • All first subscribers of SPICe+ MOA (INC-33) must have DSC, if they are less than 7 then it will be signed in the form itself no annexure will be required & in case if more than 7 then separate attachment of MOA will be annexed without DSC.
• Articles of Association is entrenched with brief description about the clause (Make sure the article number matches with form SPICe+ AOA (INC-34) )-Select the particular table which is applicable and make the appropriate changes and incorporate first directors name and in case subscribers are more than 7 then AOA will attached separately (as there are only 7 member so DSC slot available in the form)
• Declaration by the subscribers and the first directors in INC – 9 shall be auto-generated in PDF format and submitted electronically.
• The object clause should be relevant and company must be engaged in that business only.
• There is no separate application to be filed for allotment for DIN .it will be allotted with the details filled in the form in the tab directors not having DIN.
• After filling all the details stamp duty fees need to be paid which can be done through MCA or without MCA portal.
• Application for PAN number and TAN number also will be processed with spice e Plus form by selecting respective area code, AO type, Range code & AO No. After completion of these form, it should be acknowledge by DSC of CS/CA/CWA.
• Spice + AGILE PRO form is mandatory for all companies which includes following registration that is GST Registration which is optional, ESIC(Employee State Insurance Corporation) Employees' Provident Fund organization (EPFO) Registration (Mandatory) and Profession Tax Registration in case if company is of Maharashtra and Opening of Bank Account is compulsory.
• After filling up Part B, we have to carry out a ‘pre-scrutiny’ check. Once the ‘pre-scrutiny; is successful, click on ‘submit’. A confirmation is displayed upon successful submission of the form.
• After submission of these form, it should be acknowledge by DSC of CS/CA/CWA.A Service Request Number is generated for making a payment towards company incorporation. Once the payment is made successfully, the forms would be processed.
• In case form is need to be resubmitted due to any error or omission, then form will be resubmitted in the same manner.
Certificate of Incorporation After completion of process and successful approval of form, certificate of incorporation, Tan allotment letter, PAN card of Company and DIN of directors will be issued. Along with GST Registration certificate, ESIC and EPFO certificate, Professional tax registration (For Maharashtra), Opening Bank account.

Documents Required for Public Limited Company

  • PAN card and address Aadharcard of directors and shareholders are mandatory.
  • ID Proof: Self attested Passport / Voter-ID / Driving License (any one)
  • Address Proof: Self attested Latest Electricity Bill / Telephone Bill / Mobile Bill / Bank Statement with latest entries(any one)
  • Passport size Photograph for each Director/ Shareholder.
  • Email and contact details of each director/member
  • Registered office Address proof :
    1. Taken on Rent by Company- Property Tax receipt in the name of Lender/Electricity bill (not older than 2 month)-any one + Rent Agreement(After Name Approval with the proposed name of Company) + Rent Receipt of latest month.
    2. Owned by any of the Director- Property Tax receipt/Electricity bill (not older than 2 month)-any one in the name of owner.
Documents Required
Forms to be Filed

E-Forms to be Filed for Public Limited Company

  • Spice+ (INC 32)
  • Spice+ AOA (INC -34)
  • Spice+ MOA (INC-33)
  • Spice+ AGILE PRO (INC-35)

Minimum Requirement for Public Limited Company

  • Minimum 7 Shareholders
  • One of the Director must be Indian Resident.
  • Minimum 3 Directors
  • DSC (Digital Signature Certificate) for all the Directors
Minimum Requirement
Attachments

Attachment Required for Public Limited Company

  • Memorandum of Association (if more than 7 subscribers)
  • Articles of Association(if more than 7 subscribers)
  • Subscriber Sheet(if more than 7 subscribers)
  • Consent to act as Directors
  • INC-9 Declaration by Directors
  • Proof of office address:Details As mentioned above
  • Interest of first director(s) in other entities (if any)
  • Proof of identity and residential address of the Directors & members.

Government Fees for Public Limited Company

Spice form Fees
• In case of company having share capital

Nominal Share Capital Fee applicable
Up to 15,00,000 N/A
More than 15,00,000 Rupees 500

• In case of company not having share capital

Number of members Fee applicable
Up to 20 members N/A
More than 20 members Rupees 500

Stamp duty for MOA and AOA is Rs. 7550 (Madhya Pradesh)
Pan and Tan Fees is Rs. 131
Name Reservation Fees: In case applied separately in Part A for Name Reservation than Rs 1000

Govt Fees
Advantages

Advantages of Public Limited Company

  • Separate legal identity: A Public limited Company is separate from its owners, it has its own existence and legal identity that from its owners.
  • Capacity to Sue and be Sued: The Company in its own name can proceed legal Proceeding and even legal proceeding can be initiated against company being its independent identity.
  • Easy Money Raising: The public limited can raised the fundthrough bank loans, Angel Investors, Venture Capitalists, in comparison to LLPs and OPCs.
  • Easy Transferability: Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.
  • Long term Existence: Public limited Companies are not affected by the existence of their owners . It continues even after the inability or death of the owners and does not hinder the workings of the company.
  • More Attention: Being listed on a stock market ensures that mutual funds, hedge funds and other traders take note of business of the company. This may result in better business opportunities for the Public Limited Company.
  • Limited liability: Unlike Proprietorship and Partnership firms, the liability of the members of the company is limited to the extent of their share holding amount due to company.
  • Goodwill & recognition in the Market: Public limited is most recognized form of business structure and all the stakeholders would like to deal with these private companies instead of other form of business.
  • More Capital: Shares are offered to the general public at large i.e. anyone can invest in a public limited company. Hence, improves capital of the company.

Income Tax Under Public Limited Company

Following rates are applicable in case of a Public Limited Company

Type of company Rate of tax applicable Surcharge SHEC
Domestic company 25% (less than 400 crores Turnover of PY2017-18) 1Cr. to 10cr. -7%
More than 10 cr.-12%		 4%
Domestic company opting deduction under special scheme 15%(small scale industries with certain conditions)
22%(Companies who are currently using the 25% scheme can one time switch to this scheme ) 		Applicable surcharge rate
Mandatory surcharge of 10%		 4%
Domestic company who does not categories in any special scheme 30% 1Cr.-10cr. -7%
More than 10 cr.-12%		 4%
Income Tax

What is Public limited Company?

  • A Public Limited Company is incorporated as per the provisions of Company Act 2013 which has limited liability and offers shares to the general public and enjoys the benefits of limited liabilities for its members and has rights to sell its shares for raising the capital of the company.
  • It's stock can be acquired by anyone, either privately through (IPO) initial public offering or via trades on the stock market. A Public Limited Company is strictly regulated and is required to publish its true financial health to its shareholders.
  • It can be incorporated with a minimum number of three directors and has more stringent rules and regulations as compared to a Pvt. Ltd. Company.
  • Public limited companies is an ideal choice for the small and medium scale enterprises who wish to raise the equity capital from the general public.

What are the steps for registration of Public Limited Company?

  • STEP 1: Name search: We will check the availability of the company names suggested.
  • STEP 2: Digital Signature Certificate: We will obtain digital signature certificate for all proposed directors.
  • STEP 3: Reserve Unique Name: We will file RUN E-Form for name reservation.
  • STEP 4: File SPICe Form: We will file company incorporation form SPICe with all required attachments.
  • STEP 5: Certificate of Incorporation: After successful approval of form COI, PAN, DIN, TAN, GST are provided.

What are the documents required for registration of Private limited company?

  • PAN card and address Aadharcard of directors and shareholders are mandatory.
  • ID Proof: Self attested Passport / Voter-ID / Driving License (any one)
  • Address Proof: Self attested Latest Electricity Bill / Telephone Bill / Mobile Bill / Bank Statement with latest entries(any one)
  • Passport size Photograph for each Director/ Shareholder.
  • Email and contact details of each director/member
  • Registered office Address proof :
    1. Taken on Rent by Company- Property Tax receipt in the name of Lender/Electricity bill (not older than 2 month)-any one + Rent Agreement(After Name Approval with the proposed name of Company) + Rent Receipt of latest month.
    2. Owned by any of the Director- Property Tax receipt/Electricity bill (not older than 2 month)-any one in the name of owner.

What is DIN (Director Identification Number)?

DIN means an Identification Number which the Central Government may allot to any individual, intending to be appointed as director or to any existing director of a company, for the purpose of his identification as such. It is an 8 digit unique identification number which has lifetime validity. DIN is required for all existing and new (proposed) directors of a company.

What is the minimum requirement for Public Limited Company?

  • Minimum 7 Shareholders
  • One of the Director must be Indian Resident.
  • Minimum 3 Directors
  • DSC (Digital Signature Certificate) for all the Directors

What is the minimum capital requirement for Private limited company?

There is no minimum capital requirement for registration of Public Limited Company as such. The MCA in its amendments has removed the minimum capital requirement clause for incorporation of Public Limited Company

What is DSC (Digital Signature Certificate)?

A Digital Signature is the electronic signature duly issued by certifying authority that shows the authority of the person signing the same. It is an electronic equivalent of a written signature. Every user who required to sign an e-form for submission with MCA is required to obtain a Digital Signature Certificate.

What is MOA (Memorandum of Association) and AOA (Articles of Association)?

The MOA is a document which sets out the constitution of a company and is therefore the foundation on which the structure of the company is built. It defines the scope of the company’s activities and its relations with the outside world.

The articles of association of a company are its bye-laws or rules and regulations that govern the management of its internal affairs and the conduct of its business. It deals with the rights of the members of the company inter se. They are subordinate to and are controlled by the MOA.

What is the limited liability protection?

The company, being a separate person, is the owner of its assets and bound by its liabilities. The liability of a member as shareholder extends to the contribution to the share capital of the company up to the nominal value of the shares held and not paid by them. In other words, a shareholder is liable to pay the balance, if any, due on the shares held by him, when called upon to pay and nothing more, even if the liabilities of the company far exceed its assets.

What is the concept of separate legal entity?

A company being a legal person is entirely distinct from its members and is capable of enter into contracts, possess properties in its own name, sue and can be sued by others etc.

What are the advantages of Public Limited Company?

  • Separate legal identity: A Public limited Company is separate from its owners, it has its own existence and legal identity that from its owners.
  • Capacity to Sue and be Sued: The Company in its own name can proceed legal Proceeding and even legal proceeding can be initiated against company being its independent identity.
  • Easy Money Raising: The public limited can raised the fundthrough bank loans, Angel Investors, Venture Capitalists, in comparison to LLPs and OPCs.
  • Easy Transferability: Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.
  • Long term Existence: Public limited Companies are not affected by the existence of their owners . It continues even after the inability or death of the owners and does not hinder the workings of the company.
  • More Attention: Being listed on a stock market ensures that mutual funds, hedge funds and other traders take note of business of the company. This may result in better business opportunities for the Public Limited Company.
  • Limited liability: Unlike Proprietorship and Partnership firms, the liability of the members of the company is limited to the extent of their share holding amount due to company.
  • Goodwill & recognition in the Market: Public limited is most recognized form of business structure and all the stakeholders would like to deal with these private companies instead of other form of business.
  • More Capital: Shares are offered to the general public at large i.e. anyone can invest in a public limited company. Hence, improves capital of the company.

What is Authorised Share Capital and Paid up Share Capital?

The authorized share capital of a company is the amount of share capital that the company is authorized by its constitutional documents to issue (allot) to shareholders.

Paid-up Share Capital of the company is the part of authorized share capital for which the shares were issued to the shareholder. Paid-up capital is the amount that is actually paid by the shareholders to the company.

What is difference between Public Limited Company and different form of organisation?

We have prepared a detailed and easy to understand comparative table showing availability of features and advantages of one form of business to that of others. The same can be found at the end of this page.

Difference in Different Form of Business

Who is ROC (Registrar of Companies)?

The Registrar of Companies is the government authority under the Ministry of Corporate Affairs which deals with registration, administration and regulation of Limited Liability Partnership (LLP) and Companies registered under Companies Act,2013 and Companies Act,1956.

What are the disadvantages of Public Limited Company?

  • Huge compliance requirement.
  • Disclosure of financial affairs of the company publicly.
  • Shareholders (Owners) cannot interfere with directors’ powers.
  • Formation, management and winding up of public company can be expensive.

What are the examples of Public Limited Company?

A Public Limited Company can be listed on the stock exchange. It can be listed or unlisted public company. Some Examples of Public Limited Company are: Bharat Heavy Electricals Ltd, Coal India Ltd, Steel Authority of India Ltd, Indian Oil Corporation Ltd, etc.

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