Public Limited Company (PLC): Meaning, Features, Advantages, Requirements & Registration Process
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Are you considering launching a business on a large scale? If so, have you explored the concept of a public limited company? A public limited firm is a distinct legal entity with its own identity, offering unique advantages and opportunities in the business landscape.

A public limited company is legally regarded as a separate organisation distinct from its shareholders. Read on to understand the definition of a public limited company, its advantages and other important factors.

What is a Public Limited Company?

A public limited company (PLC) is a form of corporation that is publicly traded on the stock market. This kind of company is governed by the regulations of the Companies Act of 2013. Public limited companies offer shares to the general public, allowing for limited liability investment opportunities. These shares are available for investment through an Initial Public Offering (IPO). Additionally, PLCs are obligated to significantly stricter regulatory standards than private limited businesses, including financial reporting and transparency duties to shareholders and regulatory agencies. They often have a wider shareholder base and are usually larger than private limited businesses.

How do Public Limited companies work?

PLCs in India function in one of two ways: based on their preferences, they can choose to be listed or unlisted on the stock market. However, once listed, these companies are mandated to provide yearly financial reports to establish their financial health and build credibility with investors and stakeholders. In contrast to private businesses, the duration of stockholders does not influence the continual existence of the corporation. PLCs are subject to increased regulatory scrutiny regardless of whether they can obtain funds through the stock market.

Requirements to start a Public Limited company

Adherence to several regulations outlined in the Companies Act 2013 is imperative to establish a PLC. Here is a comprehensive checklist outlining the essential steps for registration:

  • Ensure having a minimum number of 7 members in a public limited company as shareholders for enlisting for the company formation.
  • Appoint at least 3 Directors to oversee the operations of the company.
  • Allocate a minimum share capital of Rs 5 lakh to initiate the registration process.
  • Secure a Digital Signature Certificate (DSC) from one of the Directors, along with self-attested copies of identity and address proofs.
  • Obtain Director Identification Numbers (DIN) for all appointed Directors.
  • File an application form to register the company's name, ensuring it complies with regulatory guidelines.
  • Prepare and submit an application outlining the company's main object clause, defining its primary objectives post-incorporation.
  • Submit the required supporting documents, including a Memorandum of Association (MoA), Form DIR-12, Articles of Association (AoA), and so on.
  • Complete payment for registration fees as prescribed by the ROC.
  • Upon approval from the ROC, apply for the issuance of the Business Commencement Certificate, marking the official commencement of business activities.

Advantages of a Public Limited Company

The features of a public limited company make it distinct from other businesses. Here are the significant benefits it offers:

Limited Liability Protection

Limited liability protects shareholders' personal assets in PLCs from corporate debts or defaults.

Share Transferability

A public limited company offers investors flexibility and liquidity in their investment portfolios by allowing them to trade their shares on stock exchanges hassle-free.

Enhanced Government Support

PLCs receive advantages in government initiatives, rewards, and subsidies intended to boost economic growth and development.

Professional Management

These companies are typically overseen by a board of directors comprising professionals with expertise across various domains of business management, ensuring effective governance and strategic decision-making.

Increased Capital Accessibility

PLCs can generate funds by issuing public shares, allowing them to reach more investors and gain access to extensive financing opportunities.

Difference between a Private Company and a Public Company

Let's understand the differences between a private limited company and a public limited company.

Parameters

Public Limited Company

Private Limited Company

Definition

A company owned by multiple individuals and listed on a stock exchange.

A closely held company with no stock exchange listing.

Paid-up Capital

Minimum Rs 5,00,000

Minimum Rs 1,00,000

Subscription from Public

Entitled to accept subscriptions from the general public for share or debenture issuance.

Prohibited from accepting subscriptions from the general public.

Directors

Minimum 3 Directors required

Minimum 2 Directors required

Members

Minimum of 7 members required

Minimum 2 members required

Appointment of Directors

A single resolution is needed to appoint one director.

A single resolution may appoint two or more Directors.

Retirement of Directors

⅔ of Directors retire by rotation annually, with at least ⅓ retiring each year.

No mandatory retirement by rotation.

List of Documents Required for Public Limited Company

Here’s a list of documents required for a PLC (Only Indicative):

  • Memorandum of Association (MoA)
  • Articles of Association (AoA)
  • Director Identification Number (DIN) for each Director
  • Digital Signature Certificates (DSC) for directors
  • Forms DIR-12, INC 7, and INC 22
  • Identity proof and address proof of directors
  • Proof of registered office address
  • A declaration of adherence to the Companies Act of 2013
  • Copy of Board Resolution approving the incorporation
  • Bank statement for the recent two months
  • PAN card of the company
  • TAN (Tax Deduction or Collection Account Number) of the company
  • Certificate of Issuance (COI) issued by the Registrar of Companies (ROC)
  • Business Commencement Certificate, if applicable
  • Any other relevant documents as required by the ROC or regulatory authorities.

Process of Public Limited Company Registration: Step-by-Step Guide

Here's a step-by-step guide to the registration process for a PLC:

  • Step 1: Use the Ministry of Corporate Affairs (MCA) web page to obtain the Director Identification Number for each company director.
  • Step 2: Acquire a Digital Signature Certificate for directors. This is necessary for digitally signing documents during the registration process.
  • Step 3: Draft MoA and AoA outlining the company's objectives, rules, and regulations. These documents must be filed with the ROC.
  • Step 4: Apply to the ROC for approval of the chosen company name. Ensure it meets the regulatory guidelines.
  • Step 5: Prepare and file various incorporation documents, including Form INC-7 (for incorporation), Form INC-22 (for address proof of registered office), and Form DIR-12 (for director appointment).
  • Step 6: Pay the registration fees online.
  • Step 7: Once the documents are submitted, they undergo verification by the Registrars of Companies (ROC). A Certificate of Incorporation (COI) will be issued after successful verification.
  • Step 8: After receiving the COI, the company can begin business operations.
  • Step 9: Lastly, after receiving the COI, apply for a certificate of commencement. This step is necessary to officially commence business activities.

Read Also : Stakeholders: What Are Stakeholders In Business: Definition, Meaning, Types, and Examples

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FAQs About Public Limited Company

What is meant by a public limited company?

A public limited company is a commercial entity in which ownership is divided into shares that are traded on a stock exchange.

What is a public limited government company?

A public limited government company is a firm in which the government owns the majority of the shares. It functions similarly to a regular public limited corporation but with government ownership.

Who is the owner of a public Ltd company?

Any single individual does not own PLCs. Shareholders of the companies hold the ownership.

Which is better, Pvt Ltd or Ltd?

The choice between Pvt Ltd and Ltd depends on factors like size and business growth goals. Each entity has its advantages and suitability based on specific business needs.

How many members are in a public limited company?

The minimum number of members in a public limited company should be 7.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.