Public Limited Company Registration

A Public Limited Company (PLC) in India is a type of company that offers its shares to the general public, allowing anyone to buy or sell shares. The Companies Act of 2013 and the Companies Rules of 2014 govern the process of registering a public limited company in India. This thorough guide offers in-depth details on the steps, advantages, requirements, and compliance associated with creating a public limited company.

Benefits of Registering a Public Limited Company

1. Limited Liability: Shareholders have limited liability, meaning their personal assets are protected and only their investment in the company is at risk.
2. Access to Capital: A PLC can raise capital by issuing shares to the public through stock exchanges.
3. Transferability of Shares: Shares of a PLC are freely transferable, enhancing liquidity for investors.
4. Enhanced Credibility: A PLC is subject to stringent regulatory norms, which enhances its credibility and trust among investors and customers.
5. Growth Opportunities: Access to broader capital sources allows for greater expansion and growth opportunities.

Key Requirements for Public Limited Company Registration

Minimum Requirements

1. Directors: You need at least three directors.
2. Shareholders: At least seven shareholders are necessary. There is no maximum limit on the number of shareholders.
3. Share Capital: A minimum paid-up capital of Rs. 5 lakhs is required.
4. Name: The company name must end with “Limited”.
5. Registered Office: The company must have a registered office in India.

Documentation Requirements

1. Director Identification Number (DIN): All directors must obtain a DIN.
2. Digital Signature Certificate (DSC): A DSC is required for the proposed directors.
3. Memorandum of Association (MOA): This document outlines the scope of operations of the company.
4. Articles of Association (AOA): This document defines the internal rules and regulations of the company.
5. Proof of Identity and Address: For all directors and shareholders.
6. Proof of Registered Office: Address proof of the registered office.

Step-by-Step Process for Registration

1. Obtain Digital Signature Certificate (DSC)

The first step involves obtaining a DSC for the proposed directors of the company. This is essential for signing electronic documents during the registration process.

2. Apply for Director Identification Number (DIN)

After obtaining the DSC, the next step is to apply for a DIN for all proposed directors. This can be done by filing Form DIR-3 with the Ministry of Corporate Affairs (MCA).

3. Name Approval

The Registrar of Companies (RoC) must approve the company’s name. You can apply for name approval using Form RUN (Reserve Unique Name). It is advisable to provide at least three to four alternative names in the order of preference.

4. Drafting of MOA and AOA

Upon name approval, the next step is to draft the MOA and AOA of the company. The MOA defines the main objectives and scope of the company, while the AOA outlines the internal management rules.

5. Filing Forms with RoC

The following forms need to be filed with the RoC:

• Form INC-7: For the incorporation of a company.
• Form DIR-12: For the appointment of directors.
• Form INC-22: For the registered office address.

6. Payment of Fees

The requisite fees for registration must be paid online. The fee structure varies based on the authorized capital of the company.

7. Certificate of Incorporation

Upon verification of the documents and forms, the RoC will issue the Certificate of Incorporation. This certificate signifies that the company is officially registered under the Companies Act, 2013.

8. Commencement of Business

A Public Limited Company must obtain a Certificate of Commencement of Business before starting any business activities. This requires filing a declaration in Form INC-20A.

Compliance and Ongoing Requirements

Annual Compliance

1. Annual General Meeting (AGM): A PLC must hold an AGM within six months from the end of the financial year.
2. Annual Return: Filing of annual return in Form MGT-7.
3. Financial Statements: Filing of financial statements in Form AOC-4.

Periodic Compliance

1. Board Meetings: A minimum of four board meetings must be held every year.
2. Statutory Audit: Annual audit of financial statements by a qualified Chartered Accountant.
3. Tax Filings: Regular filing of income tax returns and other applicable taxes such as GST.

Advantages and Disadvantages

Advantages

• Large Capital Base: Ability to raise large amounts of capital by issuing shares to the public.
• Enhanced Public Image: Greater visibility and trust among the public and investors.
• Perpetual Succession: Changes in ownership or management do not affect the company’s existence.

Disadvantages

• Regulatory Scrutiny: Subject to stringent regulatory requirements and compliance.
• Costly Compliance: Higher costs associated with compliance and administrative requirements.
• Disclosure Requirements: Obligation to disclose financial and business information publicly.

Conclusion

Registering a Public Limited Company in India under the Companies Act, 2013 and Companies Rules, 2014 offers numerous benefits, including limited liability, access to capital, and enhanced credibility. However, it also entails significant compliance and regulatory obligations. By following the detailed steps outlined above and understanding the requirements, businesses can successfully register as a Public Limited Company and leverage the advantages it offers for growth and expansion.