Updated : September 16, 2024Public Limited Company Registration Process
Overview : This comprehensive blog explains the detailed process of Public Limited Company Registration in India. It covers significant questions like what is a public limited company in India, how to register a public limited company in India, what are the features of Public Limited Companies, and what documents are required for public limited company registration in India. Our step-wise guide on the procedure is easy to navigate. Whether you’re a budding entrepreneur or an established entrepreneur looking to expand your business, this blog can be of great help!
Public Limited Companies, governed by the Companies Act of 2013, stand out as the preferred choice for large-scale ventures aspiring to attain global prominence. In this comprehensive exploration of their unique attributes, including the capacity for fundraising from the public, an unrestricted number of investors, and enticing limited liability opportunities for owners, we illuminate why this corporate structure is optimal for businesses with expansive ambitions. Also, navigate how to register a public limited company or you can say the process of Public Limited Company registration, emphasizing its pivotal role in not only providing legal identity to the business but also unlocking avenues for freely trading stocks on stock exchange platforms. Let’s begin with understanding what is a Public Limited Company in India!
What is a Public Limited Company?
Companies in India are established and governed under the Companies Act of 2013. This includes different types like Private Limited Companies, Public Limited Companies, Section 8 Companies, and Unlimited Companies as well. Since this blog explains the registration process of a Public Limited Company, you must be wondering firstly about what is a Public Limited Company in India!
A Public Limited Company is one of the many preferred forms of business structures in India. To understand its meaning, you must have an insight into the relevance of the terms “Public” and “Limited. Both these terms indicate two of the very core features of public limited companies. While the term “Public” indicates that this type of business structure can freely and publicly trade its shares without any restrictions, the term “limited” indicates that it promises limited liability to its shareholders. Note that there is no cap on the maximum number of shareholders a Public Limited Company can have, including those among the general public.
A Public Limited Company is regulated by the Ministry of Corporate Affairs and the Securities and Exchange Board of India (SEBI). It is subject to stringent laws by these regulatory agencies and is required to regularly update the shareholders of its current financial status. As a legally incorporated entity, a public limited company has a distinct legal identity, and is entitled to the right to hold properties and assets in its name.
Features of Public Limited Companies
The features of Public Limited Companies are manifold. These include limited liability for shareholders, the mandatory requirement of registration, a distinct legal entity of the business, and free trade of shares on public platforms. Besides, its suitability for businesses is marked by characteristics like no restrictions on the number of investors and fundraising potential from the general public. A brief idea of these features is necessary to understand the process of Public Limited Company Registration. The list below will be helpful in this endeavour.
- Number of Shareholders: To set up a Public Limited Company, you must have at least 7 shareholders. However, the Companies Act or any other relevant statute does not place a maximum limit on the number of shareholders that a Public Limited Company can have.
- Separation between Management and Ownership: Unlike businesses like Sole Proprietorships and Partnership Firms, where the owner is solely responsible for controlling the management of the business, the owner or shareholder of a Public Limited Company does not get involved in the management of the company at all. For this purpose, the owners appoint directors of the company who collectively form the Board of Directors of the company. All key managerial decisions of a company are made at the meetings held by the Board of Directors.
- Board of Directors: A Public Limited Company must have at least three directors to control its management, according to the Companies Act, 2013. However, this number can be extended upto 15.
- Company as a distinct legal entity: A Public Limited Company must get registered or incorporated with the Registrar of Companies in the manner prescribed in the Companies Act, 2013. As soon as it gets incorporated, the company gains a legal identity of its own, distinct from the identity of its shareholders or owners.
- Limited liability for shareholders: The relevance of the word “Limited” in a Limited Company is that the liability of its owners is restricted to the amount of the capital he has subscribed to. Under any circumstances, in order to pay off the liabilities in the name of the company, the shareholders will not have to pay any amount exceeding the worth of shares that they hold.
- Transferability of shares: Public Limited Companies that are listed on stock exchange platforms can trade their shares to all other listed entities on this platform. The sale of such shares are also open to the listed individuals, in addition to listed organizations on such platforms.
- The prospectus of the company: All Public Limited Companies must publish their company’s prospectus containing all its necessary details. Note that this is only mandatory for public companies as they trade their shares with the general public, and need to be more transparent than all other types of companies.
- Perpetual Existence: A Public Limited Company can exist beyond the life of its shareholders. Upon the death or permanent departure of any of the shareholders of a Public Limited Company, the shares he held are simply traded or transferred to a new shareholder to replace the departed shareholder.
Minimum Requirements for Public Limited Company
The Companies Act lays down certain minimum requirements that must be met before starting the Public Limited Company Registration process. These requirements are related to the minimum shareholders and directors to start the company and other essentials like a company name and an office address. In the table below, we have mentioned all the requirements for Public Limited Company Registration. For details, you can consult our experts!
| Minimum Requirements for Public Limited Company Registration | |
|---|---|
| 1. | At Least 7 Shareholders |
| 2. | At Least 3 Directors |
| 3. | A Valid Company Name (Read the Guidelines here) |
| 4. | A Fully Constructed and lockable registered office premises |
| 5. | Adequate Capital (No Minimum Prescribed Limits) |
Documents Required for Public Limited Company Registration
Documentation is the most important aspect of the Public Limited Company registration process. It marks the completion of your application and supports the details provided in it. Inaccuracy or inadequacy of documents must be avoided at all costs, since it may result in the rejection of your application. At Setindiabiz, we offer full documentation assistance as part of registration services. Here’s a list mentioning all the documents you require.
1. Documents of the Promoters
- PAN Card
- Adhar Card
- Passport Size Photograph
- Address Proof (Any Utility Bill not older than 2 months)
2. Documents of Registered Office
- Proof of Address (Any Utility Bill with Company’s name and address, not older than 2 months)
- No Objection Certificate from the Premises owner
3. Legal Drafts
- Memorandum of Association
- Articles of Association
- Director’s Consent (DIR-2)
4. Other Prerequisites
- Digital Signature of authorised director
- DIN of all Directors
Procedure of Public Limited Company Registration
After you have fulfilled all the prerequisite conditions and arranged all the documents, you can finally begin the procedure for Public Limited Company registration. We have mentioned the entire procedure in the step-wise guide below. Our experts help you navigate the process with filing assistance, documentation support, and 24*7 query resolution facilities. Our end goal is an affordable, quick, and hassle-free registration process for your Public Limited Company.
Step 1: Obtain DSC and DIN
Obtaining a director’s Digital Signature Certificate should be one of the first tasks that need to be completed. A Digital Signature Certificate is used for digitally signing the online application for company registration. This crucial document is issued by various Certifying Agencies across India, licensed for the purpose by the Ministry of Corporate Affairs. Additionally, all current directors of a Public Limited Company must have a Director Identification Number and all prospective directors must apply for it, as no individual can get appointed as the director of a company unless he has a Director Identification Number. Directors can apply for a DIN either through the SPICe+ application or the DIR 3 form.
Step 2: Select and Reserve the company’s name
The name of a Public Limited Company must be unique and communicative of its brand and business activity. Moreover, the Companies Act, the Company (Incorporation) Rules, the Trademark Act, and the Names and Emblems Act, lay down a set of mandatory guidelines that are required to be followed while naming a company. The name of a company must not be similar or identical to the name of an existing company / LLP, or an applied or registered trademark. To get a complete overview, read our article on name approval guidelines. Once you’ve selected a valid name for the company, you must reserve it with the Registrar of Companies.
Step 3: Submitting the SPICe+ form
After approving the name of a Public Limited Company, you can proceed with its incorporation. To apply for the incorporation of the company, you are required to fill out the online SPICe+ application available on the official website of MCA. The application is divided into two parts- PART A for the name reservation and PART B for company incorporation. The application is filled out and signed by any one director of the company, and submitted to the ROC along with the prescribed set of documents attached with it.
Step 4: An incorporation certificate
The ROC, after receiving the application for incorporation, verifies all the details and documents furnished in it. Only after the ROC is satisfied with the authenticity of such details and documents, he shall register the Public Limited Company, and issue a Certificate of Incorporation to the company as a conclusive proof of such registration. Additionally, the ROC also allots a Corporate Identification Number as the unique identity of the company.
Step 5: Obtaining a firm PAN and TAN
Immediately after the Certificate of Incorporation is issued to the company by the ROC, the Ministry of Finance issues the PAN and TAN to the company. While a PAN is a necessary document for tax payments and compliances, TAN is required to entitle the company for deducting and collecting taxes at source.
Step 6: Filing Commencement for Business Declaration
A Public Limited Company can commence business operations before, during or after its incorporation. However, if it has not commenced its business operations even after its incorporation, the law provides a maximum window of 6 months from the date of issuance of Certificate of Incorporation, within which the company must begin its business activities and intimate the same to the ROC in Form INC 20A. If the 6 months window expires without the company commencing its business activities, it stands the risk of being struck off from the Register of the ROC.
Conclusion
The intricate process of Public Limited Company Registration, as governed by the Companies Act of 2013, unfolds as a pivotal journey for businesses with grand aspirations. By dissecting the unique features of Public Limited Companies, such as perpetual existence, limited liability, and the capacity for unrestricted fundraising from the public, this guide serves as a compass for entrepreneurs venturing into the expansive landscape of starting a Public Limited Company. Navigating through the stepwise procedure outlined herein, we empower visionaries to transform ambitions into reality, solidifying the legal foundation of their Public Limited Companies.
