PRIVATE 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.